<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED]
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
------------------ ------------------
Commission file number 0-3555
DAVID WHITE, INC.
-----------------
(Name of small business issuer in its charter)
Wisconsin 39-0967642
--------- ----------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) No.)
11711 River Lane
P.O. Box 1007
Germantown, Wisconsin 53022-8207
--------------------- ----------
(Address of principal executive (Zip Code)
offices)
Issuer's telephone number: (414) 251-8100
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $3.00 par value
-----------------------------
(Title of class)
Common Stock Purchase Rights
----------------------------
(Title of class)
Check whether the issuer (l) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $ 15,278,000.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, a and no disclosure will be
contained, to the best registrant's knowledge, in definitive proxy or
<PAGE> 2
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $ 15,278,000.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days. (See definition of affiliate in Rule 12b-2 of the
Exchange Act.) $3,720,472 as of January 31, 1996.
State the number of shares outstanding of each of the issuer's classes
of common equity, as of March 1, 1996: 457,323.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated herein by
reference:
1995 Annual Report to Shareholders (Parts I and II, to the extent
indicated therein).
Proxy Statement for 1996 annual meeting of shareholders (previously
filed with the Commission under Regulation 14A and hereby incorporated
by reference into Part III, to the extent indicated therein).
Transitional Small Business Disclosure Format (check one) Yes [ ]
No [X]
<PAGE> 3
PART I
Item l. Business.
GENERAL
Founded in 1900, David White, Inc., a Wisconsin corporation with its
principal executive offices located in Germantown, Wisconsin (the "Company"),
is a manufacturer and distributor of medium and high technology products in the
specialty market of optical and laser surveying instruments for productivity
improvement in the construction industry.
DESCRIPTION OF BUSINESS
Prior to June 1989, the Company was divided into two product
divisions, David White Instruments and Micrographic Systems, in addition to an
International Division which handled international marketing and sales for both
product divisions. The Company effected two significant organizational changes
to its business in 1989. First, on June 30, 1989, the Company purchased 90% of
the outstanding capital stock of Ammann Lasertechnik, AG ("Ammann"), a Swiss
corporation. Second, on October 4, 1989, the Company sold its Micrographic
Systems Division.
On June 6, 1995, the Company entered into an agreement with HRA
Holding Company ("HRA"), Hans-Rudolf Ammann ("Mr. Ammann") and Thomas Ammann
pursuant to which the Company sold all of its interest in Ammann to HRA. HRA
is a Swiss entity owned and controlled by Mr. Ammann. In exchange for the sale
of its Ammann stock, the Company received 70,500 shares of Company stock
formerly owned by Mr. Ammann and Thomas Ammann, as well as $300,000 (U.S.) in
cash and cash equivalents. In connection with the transaction, the Company
also entered into a Reciprocal Supply Agreement and Technology Transfer
Agreement with Ammann. Under the Reciprocal Supply Agreement, Ammann agreed to
supply its products to the Company for two years for distribution in connection
with the Company's business, and the Company agreed to supply its products to
Ammann for two years for distribution in connection with Ammann's business.
Under the Technology Transfer Agreement, Ammann assigned certain patent rights
to the Company (valued at $200,000), and the Company granted Ammann a
non-exclusive license to make, use and sell products covered by the patents.
Ammann agreed to pay the Company a royalty of $25,000 per year for ten years in
consideration of the license.
The Company's business is now concentrated primarily in the
development, production and marketing of David White surveying instruments,
including those surveying instruments covered by the patents transferred to the
Company from Ammann. The Company also concentrates on producing and marketing
Ammann products under the Reciprocal Supply Agreement with Ammann.
David White Instruments . The Company's surveying instruments can be
divided generally into two categories: conventional optical survey instruments
and laser surveying instruments.
The Company's conventional optical surveying instruments include
levels, level/transits, automatic levels and level/transits, hand levels, rods,
targets, plumb bobs, tripods and other precision
<PAGE> 4
tools used by builders, contractors, engineers, farmers, plumbers and others.
The Company entered the laser surveying instrument field in 1981 through the
acquisition of a manufacturer of rotating laser beam electronic levels. The
Company's laser and electronic surveying instruments consist primarily of
infrared invisible laser beam and visible laser beam electronic levels and
ancillary equipment primarily for builders and contractors.
The Company's conventional surveying instruments, along with its laser
surveying instruments, are principally marketed under the "David White" trade
name. The Company's products are sold on a nonexclusive basis through
approximately 600 distributors throughout the world. The Company has entered
into certain marketing and cross-distribution arrangements for the sale of the
Company's laser products in Japan, the Pacific Rim, Asia and other areas. The
Company has also entered into additional marketing and distribution
arrangements with other companies in Europe and is investigating the
feasibility of other international strategic marketing alliances. The supply
and technology transfer agreements with Ammann and the marketing arrangements
with foreign companies reflect the Company's increasing global emphasis.
Pursuant to General Instruction E to Form 10-KSB ("Instruction E"),
information regarding the status of publicly announced new products is hereby
incorporated by reference from the information set forth on pages 1 and 2 of
the Company's 1995 Annual Report to Shareholders ("Annual Report").
Ammann. The Ammann product line consists of five laser surveying
instruments, including several products designed to meet the specific
requirements of both the light and the heavy construction industry. Ammann
continues to market both David White and Ammann products abroad through the
companies' distribution networks and marketing arrangements with other
companies. The manufacturing and assembly of two Ammann laser instruments
continues to take place at the Company's Berlin, Wisconsin plant.
COMPETITION
The Company experiences intense competition from numerous domestic and
foreign producers. Some of the Company's competitors are significantly larger
than the Company and have substantially greater financial resources. The
Company expects that it will continue to encounter highly competitive
conditions both domestically and internationally.
The Company attempts to maintain its competitive posture through
quality control, pricing strategies and an on-going program of product
improvement, new product development and increased manufacturing efficiencies.
The Company believes that its research and development team, well-developed
distribution network, marketing arrangements, established David White trade
name, reputation for quality products and ability to manufacture and market
both optical and laser surveying instruments, provide it with certain market
advantages over its competitors in the surveying equipment industry.
CERTAIN CREDIT TERMS
<PAGE> 5
Customers of the Company who place their orders for optical and laser
instruments between November l and February 28 of each year and are considered
creditworthy are extended payment terms of one-third on May l, one-third on
June l and one-third on July l. European product sales are not included in the
foregoing credit programs.
SEASONALITY
Because distributors, suppliers and end users of surveying instruments
generally place their orders for delivery prior to or during the spring and
summer construction season, third quarter sales are traditionally lower than
sales for other quarters. The Company's sales are also partially dependent
upon the growth and success of the construction industry. Interest rates may
also impact this industry. Construction industry expenditures are subject to
variation and have been affected during recent years by recessionary cycles.
PATENTS AND ENGINEERING: RESEARCH AND PRODUCT DEVELOPMENT
The Company places considerable emphasis on the optical, mechanical
and electromechanical design of its products. Most of the Company's key
products have been designed by the Company, and the Company's Technology
Transfer Agreement with Ammann granted the Company patent rights with respect
to two products that were originally designed by Ammann. Although a number of
the Company's products are covered by patents and patent applications, its
business is not materially dependent on them.
In 1995, the Company employed four individuals in research and
development and expended $399,000 for this activity, compared to $558,000 in
1994. The Company has budgeted $333,000 for research and development during
1996.
ENVIRONMENTAL REGULATION
On October 23, 1995, the Company entered into an agreement with the
State of Wisconsin to settle a claim that the Company violated state
regulations concerning the operation of an underground storage tank on the
Company's Berlin, Wisconsin property. Pursuant to that agreement, the Company
paid a $25,000 forfeiture to the State of Wisconsin. The Company has also
agreed to clean up contamination caused by leakage from the tank. The Company
reserved $200,000 in the fourth quarter of 1995 for the clean-up, which the
Company believes will be sufficient to cover any material expenses in the
future.
Apart from the foregoing, the Company does not expect foreign,
federal, state or local environmental legislation to have a material effect on
its capital expenditures, earnings or competitive position.
RAW MATERIALS
Principal raw materials used by the Company in its manufacturing
operations are a variety of electronic components, die castings, molded
plastics, various metals and optical components. All of
<PAGE> 6
such raw materials are available to the Company from several suppliers.
EMPLOYEES
The Company employs approximately 145 full time people, approximately
two-thirds of whom are in production. The balance are employed in executive,
administrative, engineering, sales and clerical capacities.
Item 2. Properties.
The following table summarizes the Company's principal properties:
<TABLE>
<CAPTION>
Owned Year Approx-
or Lease imate
Location Use Leased Expires Sq. Ft.
- -------- --- ------ ------- --------
<S> <C> <C> <C> <C>
Germantown, Executive Offices, Owned ------ 12,800
Wisconsin Marketing, Advertising,
Finance, Service
Department
Berlin, Manufacture of Optical Owned ------ 105,000
Wisconsin and Electronic
Surveying Products,
Research and Development
and Design Engineering
</TABLE>
The Company believes its current facilities are suitable, adequate and
provide sufficient capacity to support current operations. No present plans
exist for the improvement or further development of any of the properties. In
the opinion of the Company's management, the properties are adequately covered
by insurance.
The Germantown, Wisconsin and Berlin, Wisconsin properties are owned
by the Company and are currently subject to a first mortgage as security for a
$2,500,000 term note through Firstar Bank Fond du Lac (the "Bank") to the
Company. The term note is 70% guaranteed by Farmers Home Administration. The
Germantown and Berlin properties are also currently subject to a second
mortgage as security for the Bank's revolving line of credit to the Company,
which is adjusted periodically according to seasonal requirements and ranges
from $1,750,000 to $3,000,000. Pursuant to Instruction E, information
regarding the Company's term note and line of credit required by this item is
incorporated herein by reference from the information set forth in Note 3 to
the Company's Consolidated Financial Statements, set forth on page 6 of the
Annual Report. As of January 31, 1996, the outstanding balance on the term
note was $2,124,000, and the outstanding balance under the line of credit was
$1,434,000.
The federal tax basis of the land and buildings at the Germantown and
Berlin, Wisconsin
<PAGE> 7
locations are $65,000 and $466,000, and $36,000 and $398,000, respectively.
Depreciation is taken by the Company over the estimated useful life of the
buildings using the straight line method. For purposes of depreciation, the
remaining lives claimed with respect to the Germantown and Berlin properties
are 25 and 4 years, respectively. For 1995, the Company has paid or will pay
annual realty taxes on the Germantown and Berlin, Wisconsin properties in the
amount of $20,000 and $30,000, respectively.
Item 3. Legal Proceedings.
The Company is not currently a party, nor are any of its properties
subject, to any legal proceeding required to be disclosed under this Item. No
such proceedings were terminated during the fourth quarter of 1995.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Executive Officers of the Company
Each of the current executive officers of the Company is identified
below together with information about each such officer's age, current position
with the Company and employment history for the past five years:
<TABLE>
<CAPTION>
Name Position Age
- ---- -------- ---
<S> <C> <C>
Tony L. Mihalovich President, Chief Executive 48
Officer
James L. Younk Chief Financial Officer,
Vice President - Finance,
Secretary, Treasurer 53
Larry P. Hutzler Vice President-Manufacturing 54
Stephen M. Smith Vice President - Sales and 46
Marketing
</TABLE>
Mr. Mihalovich was elected as President and Chief Executive Officer on
November 16, 1992, following the resignation of E. Gustav Malm, which was
effective October 9, 1992. Prior to that time, Mr. Mihalovich served as
Executive Vice President and Chief Operating Officer from October 1989, and
served as Vice President -Finance from January 1983. During January, 1992, Mr.
Mihalovich also assumed responsibilities as Director of Manufacturing
Operations. Mr. Mihalovich also acted as Secretary from January 1992 until May
1993.
Mr. Younk was elected Vice President of Finance on February 1, 1995.
Mr, Younk was
<PAGE> 8
appointed Chief Financial Officer on December 17, 1992, in addition to his
position as Treasurer. Mr. Younk was elected as Secretary on May 4, 1993. Mr.
Younk, prior to his election as Treasurer in January 1988, served as the
Company's Controller since January 1972.
Mr. Hutzler was elected Vice President of Manufacturing on May 3,
1994. Prior to that, Mr. Hutzler held the position of Plant Manager since
October, 1992. Mr. Hutzler also served as Director-Labor Relations and Human
Resources since August, 1973.
Mr. Smith was elected Vice President of Sales and Marketing on
February 1, 1995. Mr. Smith joined the Company as its National Sales Manager
in November, 1991, prior to which he was a sales manager at Western Plow. Mr.
Smith also served as Director-Sales & Marketing since January, 1993.
The executive officers of the Company are elected annually by the
Board of Directors at the Board's annual meeting held on the same date as the
Company's annual meeting of stockholders. Each executive officer holds office
until his successor has been duly elected and qualified or until his earlier
death, resignation or removal.
<PAGE> 9
PART II
Item 5. Market for the Company's Common Stock and Related Stockholder Matters.
Pursuant to Instruction E, the information required by this Item is hereby
incorporated herein by reference from the information set forth on page 9 of
the Annual Report.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Pursuant to Instruction E, the information required by this item is
hereby incorporated herein by reference from the information set forth on page
9 of the Annual Report.
Item 7. Financial Statements.
Pursuant to Instruction E, the Consolidated Balance Sheet of the
Company as of December 31, 1995, and the Consolidated Statements of Operations,
Stockholders' Investment and Cash Flows for the years ended December 31, 1995
and 1994, together with the related notes thereto are hereby incorporated
herein by reference from the information set forth on pages 3 through 8 of the
Annual Report.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 9. Directors and Executive Officers of the Company; Compliance with
Section 16(a) of the Exchange Act.
Pursuant to Instruction E, the information required by this Item with
respect to directors is hereby incorporated herein by reference from the
information set forth under the caption "Election of Directors" set forth in
the Company's definitive Proxy Statement for its 1996 annual meeting of
shareholders previously filed with the Commission under Regulation 14A ("Proxy
Statement"). The required information with respect to executive officers
appears at the end of Part I of this Form 10-KSB. The required information
with respect to Section 16(a) compliance is set forth under the caption
"Compliance with Section 16(a) of the Securities Exchange Act of 1934" set
forth in the Company's Proxy Statement.
Item 10. Executive Compensation.
Pursuant to Instruction E, the information required by this Item is
hereby incorporated herein by reference from the information set forth under
the caption "Compensation of Executive Officers" set forth in the Proxy
Statement.
<PAGE> 10
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
Pursuant to Instruction E, the information required by this Item is
hereby incorporated herein by reference from the information set forth under
the caption "Election of Directors" and "Principal Shareholders" set forth in
the Proxy Statement.
Item 12. Certain Relationships and Related Transactions.
Sales by the Company to its foreign affiliates, including Ammann Lasertechnik
GmbH (a joint venture between the Company's former Swiss subsidiary, Ammann,
and Konrad Bachmaier of Germany), during 1995 aggregated $1,601,000.
Item 13. Exhibits and Reports on Form 8-K.
(a) The following documents are filed as a part of this report:
<TABLE>
<CAPTION>
Page Reference
--------------
1995
Annual Report
1995 to
Form 10-KSB Shareholders
----------- -------------
<S> <C> <C> <C>
l. Financial Statements.
--------------------
Consolidated Balance Sheet at --- 3
December 31, 1995
For the years ended December 31, 1995,
and 1994:
Consolidated Statements of
Operations --- 4
Consolidated Statements of
Stockholders' Investment --- 4
Consolidated Statements of
Cash Flows --- 5
Notes to Consolidated Financial
Statements --- 6-8
Independent Auditors' Report --- 9
</TABLE>
<PAGE> 11
2. Exhibits.
3.1 Restated Articles of Incorporation [Incorporated by reference to
Exhibit 3 to the Company's Form 8-K dated May 8, 1992]
3.2 By-Laws, as amended through February 22, 1996
4.1 Rights Agreement, dated as of August 29, 1988, between Company
and First Wisconsin Trust Company, as Rights Agent [Incorporated
by reference to Exhibit 4 to the Company's Form 8-K dated
September 15, 1988]
4.2 Amendment to Rights Agreement, dated as of November 9, 1988,
between Company and First Wisconsin Trust Company, as Rights
Agent [Incorporated by reference to Exhibit 4.1 to the Company's
Form 8-K dated November 10, 1988]
4.3 Amendment No. 2 to Rights Agreement dated as of June 30, 1989
between the Company and First Wisconsin Trust Company, as Rights
Agent [Incorporated by reference to Exhibit 4.2 to the Company's
Form 8-K dated June 30, 1989]
4.4 Amendment No. 3 to Rights Agreement dated as of January 22,
1992, between the Company and First Wisconsin Trust Company, as
Rights Agent [Incorporated by reference to Exhibit 4.3 to the
Company's Form 8-K dated February 7, 1992]
10.1 Amended and Restated 1981 Stock Option Plan [Incorporated by
reference to Exhibit 10.4 to the Company's Form 10-K for the
year ended December 31, 1988] *
10.2 Form of 1981 Incentive Stock Option Agreement, as amended
[Incorporated by reference to Exhibit 10.5 to the Company's Form
10-K for the year ended December 31, 1988]*
10.3 Form of Amendment to 1981 Incentive Stock Option Agreement
[Incorporated by reference to Exhibit 10.6 to the Company's Form
10-K for the year ended December 31, 1988]*
10.4 Form of Key Executive Employment and Severance Agreement, dated
as of January 25, 1990, entered into between the Company and
each of the following: Tony L. Mihalovich, Ronald J. Jansen,
James L. Younk, E. Gustav Malm, Larry Clark, Walker J. Young and
Robert L. Underberg [Incorporated by reference to Exhibit 10.4
to the Company's Form 10-K for the year ended December 31,
1992]*
10.5 Employment Agreement, dated as of January 1, 1994, between the
Company and Tony L. Mihalovich [Incorporated by reference to
Exhibit 10.5 of the Company's Form 10-KSB for the year ended
December 31, 1993, as amended by Form 8 dated April 20, 1994]*
10.6 Amendment to Employment Agreement, dated as of December 5, 1995,
between the
- ----------------------------------
* management contract or compensatory plan or arrangement.
<PAGE> 12
Company and Tony L. Mihalovich*
10.7 Stock Option Agreement, dated as of January 1, 1994, between
the Company and Tony L. Mihalovich. [Incorporated by reference
to Exhibit 10.6 at the Company's Form 10-KSB for the year ended
December 31, 1993]*
10.8 Amendment to Stock Option Agreement, dated as of December 5,
1995, between the Company and Tony L. Mihalovich*
10.9 Stock Option Agreement, dated as of January 11, 1990, between
Company and R. Ron Heiligenstein [Incorporated by reference to
Exhibit 10.11 to the Company's Form 10-K for the year ended
December 31, 1989]*
10.10 Form of Indemnity Agreement, dated as of January 24, 1990,
entered into between the Company and each of the following:
Charles D. Jacobus, Hans-Rudolf Ammann, E. Gustav Malm, R. Ron
Heiligenstein, Marshall A. Loewi, Michael S. Ariens and
Richard H. Bromley [Incorporated by reference to Exhibit
10.12 to the Company's Form 10-K for the year ended December
31, 1989]
10.11 1992 Stock Option Plan [Incorporated by reference to Exhibit
10.9 to the Company's Form 10-K for the year ended December
31, 1992]*
10.12 Form of 1992 Incentive Stock Option Agreement [Incorporated by
reference to Exhibit 10.10 to the Company's Form 10-K for the
year ended December 31, 1992]*
10.13 1995 Stock Option Plan [Incorporated by reference to Exhibit
10.11 to the Company's Form 10-QSB for the end of the second
quarter of 1995]*
10.14 Stock Purchase Agreement, dated as of May 31, 1995, entered
into between the Company and Hans-Rudolf Ammann, Jolanda
Ammann, Konrad Bachmaier and Thomas Ammann [Incorporated by
reference to Exhibit 10.12 to the Company's Form 10-QSB for
the end of the second quarter of 1995]
10.15 License Agreement, dated as of May 31, 1995, entered into
between the Company and Ammann Lasertechnik, AG [Incorporated
by reference to Exhibit 10.13 to the Company's Form 10-QSB for
the end of the second quarter of 1995]
10.16 Ammann Lasertechnik AG Supply Agreement, dated as of May 31,
1995, entered into between the Company and Ammann
Lasertechnik, AG [Incorporated by reference to Exhibit 10.14
to the Company's Form 10-QSB for the end of the second quarter
of 1995]**
10.17 David White, Inc. Supply Agreement, dated as of May 31, 1995,
entered into between the Company
- ----------------------------------
* management contract or compensatory plan or arrangement.
** Certain information in this Exhibit was omitted pursuant to a request
for confidential treatment. The information and the request were
separately filed with the Commission.
<PAGE> 13
and Ammann Lasertechnik, AG [Incorporated by reference to
Exhibit 10.15 to the Company's Form 10-QSB for the end of the
second quarter of 1995]**
10.18 Transfer and Assignment Agreement, dated as of May 31, 1995,
entered into between the Company and Ammann Lasertechnik, AG
[Incorporated by reference to Exhibit 10.16 to the Company's
Form 10-QSB for the end of the second quarter of 1995]
10.19 Pledge Agreement, dated as of May 31, 1995, entered into
between the Company and Hans-Rudolf Ammann, Jolanda Ammann,
Konrad Bachmaier and Thomas Ammann [Incorporated by reference
to Exhibit 10.17 to the Company's Form 10-QSB for the end of
the second quarter of 1995]
10.20 Summary [English Translation] of German Joint Venture Ammann
Lasertechnik GmbH, March 1991 [Incorporated by reference to
Exhibit 10.8 to the Company's Form 10-K for the year ended
December 31, 1991]
13 1995 Annual Report to Shareholders [Except to the extent
expressly incorporated herein by reference, this 1995 Annual
Report to Shareholders shall not be deemed "filed" with the
Securities and Exchange Commission as part of this Form 10-KSB]
21 Subsidiary of the Company
27 Financial Data Schedule
28 Proxy Statement for 1996 Annual Meeting of Shareholders
[Previously filed with the Securities and Exchange Commission
under Regulation 14A and incorporated by reference in this Form
10-KSB to the extent indicated herein]
(b) No reports on Form 8-K were filed by the Company with the
Securities and Exchange Commission during the fourth quarter of 1995.
<PAGE> 14
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DAVID WHITE, INC.
Date: 3/28/96 By: /s/ Tony L. Mihalovich
---------------------------------
Tony L. Mihalovich,
President, Chief Executive
Officer, Director
Date: 3/28/96 By: /s/ James L. Younk
---------------------------------
James L. Younk, Treasurer,
Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Date: 3/28/96 By: /s/ Michael S. Ariens
---------------------------------
Michael S. Ariens,
Director
Date: 3/28/96 By: /s/ R. Ron Heiligenstein
---------------------------------
R. Ron Heiligenstein,
Director
Date: 3/28/96 By: /s/ Charles D. Jacobus
---------------------------------
Charles D. Jacobus,
Director
Date: 3/28/96 By: /s/ Marshall A. Loewi
---------------------------------
Marshall A. Loewi,
Director
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
DESCRIPTION PAGE NO.
----------- ---------
<S> <C> <C>
3.1 Restated Articles of Incorporation [Incorporated by reference to Exhibit 3 to the Company's Form 8-K dated
May 8, 1992] N/A
3.2 By-Laws, as amended through February 22, 1996 18
4.1 Rights Agreement, dated as of August 29, 1988, between Company and First Wisconsin Trust Company, as Rights
Agent [Incorporated by reference to Exhibit 4 to the Company's Form 8-K dated September 15, 1988] N/A
4.2 Amendment to Rights Agreement, dated as of November 9, 1988, between Company and First Wisconsin Trust
Company, as Rights Agent [Incorporated by reference to Exhibit 4.1 to the Company's Form 8-K dated November
10, 1988] N/A
4.3 Amendment No. 2 to Rights Agreement dated as of June 30, 1989 between the Company and First Wisconsin Trust
Company, as Rights Agent [Incorporated by reference to Exhibit 4.2 to the Company's Form 8-K dated June 30,
1989] N/A
4.4 Amendment No. 3 to Rights Agreement dated as of January 22, 1992, between the Company and First Wisconsin
Trust Company, as Rights Agent [Incorporated by reference to Exhibit 4.3 to the Company's Form 8-K dated
February 7, 1992] N/A
10.1 Amended and Restated 1981 Stock Option Plan [Incorporated by reference to Exhibit 10.4 to the Company's Form
10-K for the year ended December 31, 1988]* N/A
10.2 Form of 1981 Incentive Stock Option Agreement, as amended [Incorporated by reference to Exhibit 10.5 to the
Company's Form 10-K for the year ended December 31, 1988]* N/A
10.3 Form of Amendment to 1981 Incentive Stock Option Agreement [Incorporated by reference to Exhibit 10.6 to the
Company's Form 10-K for the year ended December 31, 1988]* N/A
10.4 Form of Key Executive Employment and Severance Agreement, dated as of January 25, 1990, entered into between
the Company and each of the following: Tony L. Mihalovich, Ronald J. Jansen, James L. Younk, E. Gustav Malm,
Larry Clark, Walker J. Young and Robert L. Underberg [Incorporated by reference to Exhibit 10.4 to the
</TABLE>
- ----------------------------------
* management contract or compensatory plan or arrangement.
E-1
<PAGE> 16
<TABLE>
<S> <C> <C>
Company's Form 10-K for the year ended December 31, 1992]* N/A
10.5 Employment Agreement, dated as of January 1, 1994, between the Company and Tony L. Mihalovich [Incorporated
by reference to Exhibit 10.5 of the Company's Form 10-KSB for the year ended December 31, 1993, as amended by
Form 8 dated April 20, 1994]* N/A
10.6 Amendment to Employment Agreement, dated as of December 5, 1995, between the Company and Tony L. Mihalovich* 47
10.7 Stock Option Agreement, dated as of January 1, 1994, between the Company and Tony L. Mihalovich.
[Incorporated by reference to Exhibit 10.6 at the Company's Form 10-KSB for the year ended December 31,
1993]* N/A
10.8 Amendment to Stock Option Agreement, dated as of December 5, 1995, between the Company and Tony L.
Mihalovich* 51
10.9 Stock Option Agreement, dated as of January 11, 1990, between Company and R. Ron Heiligenstein [Incorporated
by reference to Exhibit 10.11 to the Company's Form 10-K for the year ended December 31, 1989]* N/A
10.10 Form of Indemnity Agreement, dated as of January 24, 1990, entered into between the Company and each of the
following: Charles D. Jacobus, Hans-Rudolf Ammann, E. Gustav Malm, R. Ron Heiligenstein, Marshall A. Loewi,
Michael S. Ariens and Richard H. Bromley [Incorporated by reference to Exhibit 10.12 to the Company's Form
10-K for the year ended December 31, 1989] N/A
10.11 1992 Stock Option Plan [Incorporated by reference to Exhibit 10.9 to the Company's Form 10-K for the year
ended December 31, 1992]* N/A
10.12 Form of 1992 Incentive Stock Option Agreement [Incorporated by reference to Exhibit 10.10 to the Company's
Form 10-K for the year ended December 31, 1992]* N/A
10.13 1995 Stock Option Plan [Incorporated by reference to Exhibit 10.11 to the Company's Form 10-QSB for the end
of the second quarter of 1995]* N/A
10.14 Stock Purchase Agreement, dated as of May 31, 1995, entered into between the Company and Hans-Rudolf Ammann,
Jolanda Ammann, Konrad Bachmaier and Thomas Ammann [Incorporated by reference to Exhibit 10.12 to the Company's
Form 10-QSB for the end of the second quarter of 1995] N/A
10.15 License Agreement, dated as of May 31, 1995, entered into between the Company and Ammann
</TABLE>
- ----------------------------------
* management contract or compensatory plan or arrangement.
E-2
<PAGE> 17
<TABLE>
<S> <C>
Lasertechnik, AG [Incorporated by reference to Exhibit 10.13 to the Company's Form 10-QSB for the end of the
second quarter of 1995] N/A
10.16 Ammann Lasertechnik AG Supply Agreement, dated as of May 31, 1995, entered into between the Company and
Ammann Lasertechnik, AG [Incorporated by reference to Exhibit 10.14 to the Company's Form 10-QSB for the end
of the second quarter of 1995]** N/A
10.17 David White, Inc. Supply Agreement, dated as of May 31, 1995, entered into between the Company and Ammann
Lasertechnik, AG [Incorporated by reference to Exhibit 10.15 to the Company's Form 10-QSB for the end of the
second quarter of 1995]** N/A
10.18 Transfer and Assignment Agreement, dated as of May 31, 1995, entered into between the Company and Ammann
Lasertechnik, AG [Incorporated by reference to Exhibit 10.16 to the Company's Form 10-QSB for the end of the
second quarter of 1995] N/A
10.19 Pledge Agreement, dated as of May 31, 1995, entered into between the Company and Hans-Rudolf Ammann, Jolanda
Ammann, Konrad Bachmaier and Thomas Ammann [Incorporated by reference to Exhibit 10.17 to the Company's Form
10-QSB for the end of the second quarter of 1995] N/A
10.20 Summary [English Translation] of German Joint Venture Ammann Lasertechnik GmbH, March 1991 [Incorporated by
reference to Exhibit 10.8 to the Company's Form 10-K for the year ended December 31, 1991] N/A
13 1995 Annual Report to Shareholders [Except to the extent expressly incorporated herein by reference, this
1995 Annual Report to Shareholders shall not be deemed "filed" with the Securities and Exchange Commission as
part of this Form 10-KSB] 53
21 Subsidiary of the Company 65
27 Financial Data Schedule 66
28 Proxy Statement for 1996 Annual Meeting of Shareholders [Previously filed with the Securities and Exchange
Commission under Regulation 14A and incorporated by reference in this Form 10-KSB to the extent indicated
herein] N/A
</TABLE>
- ----------------------------------
** Certain information in this Exhibit was omitted pursuant to a request
for confidential treatment. The information and the request were
separately filed with the Commission.
E-3
<PAGE> 1
EXHIBIT 3.2
-------------------------
As Amended
Through February 22, 1996
-------------------------
BY-LAWS
OF
DAVID WHITE, INC.
(a Wisconsin corporation)
ARTICLE I. OFFICES
1.01. Registered Office. The registered office of the Corporation
shall be at 11711 River Lane, Village of Germantown, County of Washington,
State of Wisconsin, and the name of the registered agent in charge thereof is
Tony L. Mihalovich.
l.02. Business Offices. The Corporation shall also have an office
in the Village of Germantown, Wisconsin, and at such other places as the Board
of Directors may, from time to time, determine or the business of the
corporation may require.
ARTICLE II. STOCKHOLDERS
2.01. Annual Meeting. The annual meeting of the stockholders for
the purpose of electing directors shall be held on the fourth Tuesday in May,
in each year at 2:00 o'clock p.m., or on such other day and at such other time
within thirty (30) days before or after said day as may be designated by or
under the authority of the Board of Directors. Any other proper business may
be transacted at the annual meeting. If the day fixed for the annual meeting
shall be a legal holiday in the State of Wisconsin, such meeting shall be held
on the next succeeding business day. If the election of directors shall not be
held on the day designated herein, or as herein provided, for any annual
meeting of the stockholders or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as conveniently may be.
2.02. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Wisconsin, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all stockholders entitled to vote at a
meeting may designate any place, either within or without the State of
Wisconsin, as the place for the holding of such meeting. If no designation is
made, or if a special meeting be otherwise called, the place of meeting shall
be the principal business office of the corporation in the State of Wisconsin
or such other suitable place in the same county as said office as may be
designated by the person calling such meeting, but any meeting may be adjourned
to reconvene at any place designated by vote of a majority of the shares
represented thereat.
2.03. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a
1
<PAGE> 2
special meeting, the purpose or purposes for which the meeting is called, shall
be delivered not less than ten days (unless a longer period is required by law)
nor more than sixty (60) days before the date of the meeting, either personally
or by mail, by or at the direction of the President, or the Secretary, or other
officers, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail, addressed to the stockholder at his address as it appears on the
stock record books of the corporation, with postage thereon prepaid. An
affidavit of the secretary or an assistant secretary or the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the fact stated therein.
2.035. Proper Business or Purposes of Stockholder Meetings. To be
properly brought before a meeting of stockholders, business must be (a)
specified in the notice of the meeting (or any supplement thereto) given by or
at the discretion of the Board of Directors or otherwise as provided in Section
2.03 of these By-laws; (b) otherwise properly brought before the meeting by or
at the direction of the Board of Directors; or (c) otherwise properly brought
before the meeting by a stockholder in compliance with this Section 2.035 (as
it is in effect prior to such meeting). For business to be properly brought
before a meeting by a stockholder, the stockholder must have given written
notification thereof, either by personal delivery or by United States mail,
postage prepaid, to the Secretary of the Corporation, and, in the case of an
annual meeting, such notification must be given not later than thirty (30) days
in advance of the Originally Scheduled Date of such meeting; provided, however,
that if the Originally Scheduled Date of such annual meeting is earlier than
the date specified in these By-laws as the date of the annual meeting and if
the Board of Directors does not determine otherwise, or in the case of a
special meeting of stockholders, such written notice may be so given and
received not later than the close of business on the 15th day following the
date of the first public disclosure, which may include any public filing with
the Securities and Exchange Commission, of the Originally Scheduled Date of
such meeting. Any such notification shall set forth as to each matter the
stockholder proposes to bring before the meeting (i) a brief description of
each item of business desired to be brought before the meeting and the reasons
for conducting such business at the meeting and, in the event that such
business includes a proposal to amend either the Restated Articles of
Incorporation or By-laws of the Corporation, the exact language of each such
proposed amendment; (ii) the name and address of the stockholder proposing such
business; (iii) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to propose such business; and (iv) any
material interest of the stockholder in such business. No item of business
shall be conducted at a meeting of stockholders except in strict accordance
with this Section 2.035 (as it is in effect prior to such meeting), and the
chairman of any meeting of stockholders may refuse to permit any business to be
brought before such meeting without compliance with the foregoing procedures.
For purposes of these By-laws, the "Originally Scheduled Date" of any meeting
of stockholders shall be the date such meeting is scheduled to occur as
specified in the notice of such meeting first generally given to stockholders
regardless of whether any subsequent notice is given for such meeting or the
record date of such meeting is changed. Nothing contained in this Section
2.035 shall be construed to limit the rights of a stockholder to submit
proposals to the corporation which comply with the proxy rules of the
Securities and Exchange Commission for inclusion in the corporation's proxy
statement for consideration at stockholder meetings.
2.04. Fixing of Record Date.
(a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or
<PAGE> 3
exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than
sixty (60) nor less than ten (10) days before the date of such meeting, nor
more than sixty (60) days prior to any other action.
(b) If no record date is fixed:
(l) The record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day on which
notice is given, or if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held.
(2) The record date for determining stockholders
for any other purpose shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating thereto.
(c) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
2.05. Voting Lists. The officer who has charge of the stock ledger
of a corporation shall prepare and make, at least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. Upon the willful neglect or refusal of the
directors to produce such a list at any meeting for the election of directors,
they shall be ineligible for election to any office at such meeting. The stock
ledger shall be the only evidence as to who are the stockholders entitled to
examine the stock ledger, the list required by this section or the books of the
corporation, or to vote in person or by proxy at any meeting of stockholders.
2.06. Quorum. Except as otherwise provided in the Restated Articles
of Incorporation, a majority of the shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
stockholders. If a quorum is present, the affirmative vote of the majority of
the shares represented at the meeting and entitled to vote on the subject
matter shall be the act of the stockholders, unless the vote of a greater
number or voting by classes is required by law or the Restated Articles of
Incorporation. Though less than a quorum of the outstanding shares are
represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
2.07. Conduct of Meetings. The Chairman of the Board, and in his
absence, the President, and in their absence, a Vice President in the order
provided under Section 4.06, and in their absence, any person chosen by the
stockholders present shall call the meeting of the stockholders to order and
shall act as chairman of the meeting, and
3
<PAGE> 4
the Secretary of the corporation shall act as secretary of all meetings of the
stockholders, but in the absence of the Secretary, the presiding officer may
appoint any other person to act as secretary of the meeting.
2.08. Proxies. At all meetings of stockholders, a stockholder
entitled to vote may vote by proxy appointed in writing by the stockholder or
by his duly authorized attorney-in-fact. Such proxy shall be filed with the
Secretary of the corporation before or at the time of the meeting. Unless
otherwise provided in the proxy, a proxy may be revoked any time before it is
voted, either by written notice filed with the Secretary or the acting
secretary of the meeting or by oral notice given by the stockholder to the
presiding officer during the meeting. The presence of a stockholder who has
filed his proxy does not of itself constitute a revocation. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy. The Board of Directors shall have the power and
authority to make rules establishing presumptions as to the validity and
sufficiency of proxies.
2.09. Voting of Shares. Each outstanding share shall be entitled to
one vote upon each matter submitted to a vote at a meeting of stockholders,
except to the extent that the voting rights of the shares of any class or
classes are enlarged, limited or denied by the Restated Certificate of
Incorporation.
2.10. Voting of Shares by Certain Holders.
(a) Other Corporations. Shares standing in the name of
another corporation may be voted either in person or by proxy, by the president
of such corporation or any other officer appointed by such president. A proxy
executed by any principal officer of such other corporation or assistant
thereto shall be conclusive evidence of the signer's authority to act, in the
absence of express notice to this corporation, given in writing to the
Secretary, of the designation of some other person by the Board of Directors or
the By-laws of such other corporation.
(b) Legal Representatives and Fiduciaries. Shares held
by an administrator, executor, guardian, conservator, trustee-in- bankruptcy,
receiver, or assignee for creditors may be voted by him, either in person or by
proxy, without a transfer of such shares into his name, provided that there is
filed with the Secretary before or at the time of meeting proper evidence of
his incumbency and the number of shares held. Shares standing in the name of a
fiduciary may be voted by him, either in person or by proxy. A proxy executed
by a fiduciary, shall be conclusive evidence of the signer's authority to act,
in the absence of express notice to this Corporation, given in writing to the
Secretary of this Corporation, that such manner of voting is expressly
prohibited or otherwise directed by the document creating the fiduciary
relationship.
(c) Pledgees. A stockholder whose shares are pledged
shall be entitled to vote such shares unless in the transfer by the pledgor on
the books of the corporation he has expressly empowered the pledgee to vote
thereon, in which case only the pledgee, or his proxy, may represent such stock
and vote thereon.
(d) Treasury Stock and Subsidiaries. Neither treasury
shares, nor shares held by another corporation if a majority of the shares
entitled to vote for the election of directors of such other corporation is
held by this corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares entitled to vote, but shares
of its own issue held by it in a fiduciary capacity may be voted and shall be
counted in determining the total number of outstanding shares entitled to vote.
4
<PAGE> 5
(e) Minors. Shares held by a minor may by voted by such
minor in person or by proxy and no such vote shall be subject to disaffirmance
or avoidance, unless prior to such vote the Secretary of the Corporation has
received written notice or has actual knowledge that such shareholder is a
minor.
(f) Incompetents and Spendthrifts. Shares held by an
incompetent or spendthrift may be voted by such incompetent or spendthrift in
person or by proxy and no such vote shall be subject to disaffirmance or
avoidance, unless prior to such vote the Secretary of the Corporation has
actual knowledge that such stockholder as been adjudicated an incompetent or
spendthrift or actual knowledge of filing of judicial proceedings for
appointment of a guardian.
(g) Joint Tenants. If shares or other securities having
voting power stand of record in the names of two or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants-in-common,
tenants by the entirety or otherwise, or if two or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary of the
Corporation is given written notice to the contrary and is furnished with a
copy of the instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting shall have the
following effect:
(l) If only one votes, his act binds all;
(2) If more than one vote, the act of the
majority so voting binds all;
(3) If more than one vote, but the vote is evenly
split on any particular matter, each faction may vote the securities
in question proportionally, or any person voting the shares, or a
beneficiary, if any, may apply to the Court of Chancery or such other
court as may have jurisdiction to appoint an additional person to act
with the persons so voting the shares, which shall then be voted as
determined by a majority of such persons and the person appointed by
the Court. If the instrument so filed shows that any such tenancy is
held in unequal interests, a majority or even-split for the purpose of
this subsection shall be a majority or even-split in interest.
2.11 Waiver of Notice by Stockholders. Whenever any notice
whatever is required to be given to any stockholder of the Corporation under
the Restated Articles of incorporation or By-laws or any provision of law, a
written waiver thereof signed by the stockholder entitled to notice, whether
before or after the time of meeting, shall be deemed equivalent to notice.
Attendance of a person at a meeting of stockholders shall constitute a waiver
of notice of such meeting, except when the stockholder attends a meeting for
the express purpose of objecting, at the beginning of such meeting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at nor the purpose of any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers, Classification and Number. The business and
affairs of the Corporation shall be managed by its Board of Directors. The
number of directors of the Corporation shall be five (5), divided into three
(3) substantially equal classes.
5
<PAGE> 6
At each annual meeting of stockholders, the successors to the class of
directors whose term shall expire at the time of such annual meeting shall be
elected to hold office until the third succeeding annual meeting of
stockholders, and until their successors are elected and qualify.
As of February 22, 1996, and until this Section 3.01 is otherwise
amended, the class of directors to be elected by stockholders at the
Corporation's 1996 annual meeting of stockholders shall consist of two (2)
directors, the class of directors to be elected by stockholders at the
Corporation's 1997 annual meeting of stockholders shall consist of one (1)
director, and the class of directors to be elected by stockholders at the
6
<PAGE> 7
Corporation's 1998 annual meeting of stockholders shall consist of two (2)
directors.
3.02. Tenure and Qualifications. Each director shall hold office
until the annual meeting of stockholders at which his term expires and until
his successor shall have been elected, or until his prior death, resignation or
removal. A director may resign at any time by filing his written resignation
with the Secretary of the Corporation. Directors need not be residents of the
State of Wisconsin or stockholders of the Corporation.
3.025. Stockholder Nomination Procedure. Nominations for the
election of directors may be made by the Board of Directors or a committee
appointed by the Board of Directors or by any stockholder entitled to vote for
the election of directors who complies fully with the requirements of this
Section 3.025 (as it is in effect prior to such meeting). Any stockholder
entitled to vote for the election of directors at an annual meeting may
nominate a person or persons for election as a director or directors only if
written notice of such stockholder's intent to make any such nomination is
given, either by personal delivery or by United States mail, postage prepaid,
to the Secretary of the Corporation not later than thirty (30) days in advance
of the Originally Scheduled Date of such annual meeting (provided, however,
that if the Originally Scheduled Date of such meeting is earlier than the date
specified in these By-laws as the date of the annual meeting and if the Board
of Directors does not determine otherwise, such written notice may be so given
and received not later than the close of business on the 15th day following the
date of the first public disclosure, which may include any public filing with
the Securities and Exchange Commission, of the Originally Scheduled Date of
such meeting). Each such notice shall set forth (a) the name and address of
the stockholder who intends to make the nomination and of the person or persons
to be nominated; (b) a representation that the stockholder is a holder of
record of stock of the Corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (d) such other information
regarding each nominee proposed by such stockholder as would have been required
to be included in a proxy statement filed pursuant to the proxy rules of the
Securities and Exchange Commission had each nominee been nominated, or intended
to be nominated, by the Board of Directors; and (e) the consent of each nominee
to serve as a director of the Corporation if so elected. The chairman of any
meeting of stockholders to elect directors and the Board of Directors may
refuse to acknowledge the nomination by a stockholder of any person not made in
compliance with this Section 3.025 (as it is in effect prior to such meeting).
3.03. Regular Meetings. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of
Wisconsin, for the holding of regular meetings without other notice than such
resolutions.
3.04. Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the Chairman of the Board, President or
the Secretary. The person or persons calling such meeting may designate any
place, either within or without the State of Wisconsin, as the place for
holding any such meeting called by them. If no designation is made, the place
of meeting shall be the principal business office of the Corporation in the
State of Wisconsin.
3.05. Notice; Waiver. Notice of each meeting of the Board of
Directors (unless otherwise provided in or pursuant to Section 3.03) shall be
given to each director not less than 24 hours prior to the meeting by giving
oral,
7
<PAGE> 8
telephone or written notice to a director in person, or by telegram, or not
less than 48 hours prior to the meeting by delivering or mailing written notice
to the business address or such other address as a director shall have
designated in writing filed with the Secretary. If mailed, such notice shall
be deemed to be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram addressed as in the
case of notice by mail is delivered to the telegraph company. Whenever any
notice whatever is required to be given to any director of the Corporation
under the Restated Articles of Incorporation or By-laws or any provision of
law, a waiver thereof in writing, signed at any time, whether before or after
the time of meeting, by the director entitled to such notice, shall be deemed
equivalent to the giving of such notice. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting and objects thereat to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the notice of waiver of
notice of such meeting.
3.06. Quorum. Except as otherwise provided by law or by the
Restated Articles of Incorporation or these By-laws, a majority of the number
of directors fixed in Section 3.01 shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but a
majority of the directors present (though less than such quorum) may adjourn
the meeting from time to time without further notice.
3.07. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by law or by the
Restated Articles of Incorporation or these By-laws.
3.08. Conduct of Meetings. The Chairman of the Board, and in his
absence, the President, and in their absence, a Vice President in the order
provided under Section 4.06, and in their absence, any director chosen by the
directors present, shall call meetings of the Board of Directors to order and
shall act as chairman of the meeting. The Secretary of the Corporation shall
act as secretary of all meetings of the Board of Directors, but in the absence
of the Secretary, the presiding officer may appoint any Assistant Secretary or
any director or other person present to act as secretary of the meeting.
3.09. Vacancies. Any vacancy occurring in the Board of Directors,
including a vacancy crated by an increase in the number of directors, may be
filled until the next succeeding annual election by the affirmative vote of a
majority of the directors then in office, though less than a quorum of the
Board of Directors; provided, that in case of a vacancy created by the removal
of a director by vote of the stockholders, the stockholders shall have the
right to fill such vacancy at the same meeting or any adjournment thereof.
3.10. Compensation. The Board of Directors, by affirmative vote of
a majority of the directors then in office, and irrespective of any personal
interest of any of its members, may establish reasonable compensation of all
directors for services to the Corporation as directors, officers or otherwise,
or may delegate such authority to an appropriate committee. The Board of
Directors also shall have authority to provide for or delegate authority to an
appropriate committee to provide for reasonable pensions, disability or death
benefits, and other benefits or payments, to directors, officers and employees
and to their estates, families, dependents or beneficiaries on account of prior
services rendered by such directors, officers and employees to the Corporation.
8
<PAGE> 9
3.11. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors or a committee thereof of which
he is a member at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his written
dissent to such action with the person acting as the secretary of the meeting
before the adjournment thereof or shall forward such dissent by registered mail
to the Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
3.12. Committees. The Board of Directors by resolution adopted by
the affirmative vote of a majority of the number of directors fixed in Section
3.01 may designate one or more committees, each committee to consist of three
or more directors elected by the Board of Directors, which to the extent
provided in said resolution as initially adopted, and as thereafter
supplemented or amended by further resolution adopted by a like vote, shall
have and may exercise, when the Board of Directors is not in session, the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, except action in respect to dividends to stockholders,
election of the principal officers or the filling of vacancies in the Board of
Directors or committees created pursuant to this section. The Board of
Directors may elect one or more of its members as alternate members of any such
committee who may take the place of any absent member or members at any meeting
of such committee, upon request by the Chairman of the Board or upon request by
the chairman of such meeting. Each such committee shall fix its own rules
governing the conduct of its activities and shall make such reports to the
Board of Directors of its activities as the Board of Directors may request.
3.13. Unanimous Consent without Meeting. Any action required or
permitted by the Restated Articles of Incorporation or By-laws or any provision
of law to be taken by the Board of Directors at a meeting or by resolution may
be taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the directors then in office.
ARTICLE IV. OFFICERS
4.01. Number. The principal officers of the corporation shall be a
Chairman of the Board, a President, a Vice President, a Secretary, and a
Treasurer, each of whom shall be elected by the Board of Directors. Such other
officers and assistant officers as may be deemed necessary may be elected or
appointed by the Board of Directors. Any number of offices may be held by the
same person.
4.02. Election and Term of Office. The officers of the Corporation
to be elected by the Board of Directors shall be elected annually by the Board
of Directors at the first meeting of the Board of Directors held after each
annual meeting of the stockholders. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have been duly elected or until his prior death, resignation or removal.
4.03. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed by the Board of Directors whenever in its
judgment the best interest of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment shall not of itself create contract
rights.
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4.04. Vacancies. A vacancy in any principal office because of
death, resignation, removal, disqualification or otherwise, shall be filled by
the Board of Directors for the unexpired portion of the term.
4.05. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the Board of Directors and of the stockholders and
shall perform all such other duties as may be prescribed by the Board of
Directors from time to time.
4.06. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present and in the absence of the
Chairman of the Board, preside at all meetings of the stockholders and of the
Board of Directors. He shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint and remove such agents and
employees of the Corporation as he shall deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to them. He shall
have authority to sign, execute and acknowledge, on behalf of the corporation,
all deeds, mortgages, securities, contracts, leases, reports, and all other
documents or other instruments necessary or proper to be executed in the course
of the Corporation's regular business, or which shall be authorized by
resolution of the Board of Directors; and, except as otherwise provided by law
or the Board of Directors, he may authorize any Vice President or other officer
or agent of the Corporation to sign, execute and acknowledge such documents or
instruments in his place and stead. In general, he shall perform all duties
incident to the office of President of the Corporation and such duties as may
be prescribed by the Board of Directors from time to time.
4.07. The Vice Presidents. In the absence of the President and of
the Chairman of the Board, or in the event of their death, inability, or
refusal to act, or in the event for any reason it shall be impracticable for
the Chairman of the Board and the President to act personally, the Vice
President (or in the event there be more than one Vice President, the Vice
Presidents in the order designated by the Board of Directors, or in the absence
of any such designation, then in the order of election, unless otherwise
provided by the Board of Directors) shall perform the duties of the Chairman of
the Board and/or the President, and when so acting, shall have all the powers
of and be subject to all the restrictions upon the Chairman of the Board and/or
the President. Any Vice President shall perform such duties and have such
authority as from time to time may be assigned to him by the President or by
the Board of Directors. The execution of any instrument of the Corporation by
any Vice President shall be conclusive evidence, as to third parties, of his
authority to act in the stead of the President.
4.08. The Secretary. The Secretary shall: (a) keep the minutes of
the meetings of the stockholders and of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these By-laws or as required by law; (c) be
custodian of the corporate records and of the seal of the Corporation and see
that the seal of the corporation is affixed to all documents the execution of
which on behalf of the Corporation under its seal is duly authorized; (d) keep
or arrange for the keeping of a register of the post office address of each
stockholder which shall be furnished to the Secretary by such stockholder; (e)
sign with the President, or a Vice President, certificates for shares of the
Corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
the Corporation; and (g) in general perform all duties incident to the office
of Secretary and have such other duties and exercise such authority as from
time to time may be delegated or assigned to him by the President or the Board
of Directors.
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4.09. The Treasurer. If required by the Board of Directors, the
Treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such surety or sureties as the Board of Directors shall determine.
He shall (a) have charge and custody of and be responsible for all funds and
securities of the Corporation; receive and give receipts for monies due and
payable to the Corporation from any source whatsoever, and deposit all such
monies in the name of the Corporation in such banks, trust companies or other
depositories as shall be selected in accordance with the provisions of Section
5.04; and (b) in general perform all of the duties incident to the office of
Treasurer and have such other duties and exercise such other authority as from
time to time may be delegated or assigned to him by the President or the Board
of Directors.
4.10. Assistant Secretaries and Assistant Treasurers. There shall
be such number of Assistant Secretaries and Assistant Treasurers as the Board
of Directors may from time to time authorize. The Assistant Secretaries may
sign with the President or a Vice President certificates for shares of the
Corporation, the issuance of which shall have been authorized by a resolution
of the Board of Directors. The Assistant Treasurers shall respectively, if
required by the Board of Directors, give bonds for the faithful discharge of
their duties in such sums and with such sureties as the Board of Directors
shall determine. The Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties and have such authority as shall from time
to time be delegated or assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
4.11. Other Assistants and Acting Officers. The Board of Directors
shall have the power to appoint any person to act as assistant to any officer,
or as agent for the Corporation in his stead, or to perform the duties of such
officer whenever for any reason it is impracticable for such officer to act
personally, and such assistant or acting officer or other agent so appointed by
the Board of Directors shall have the power to perform all the duties of the
office to which he is so appointed to be assistant, or as to which he is so
appointed to act, except as such power may be otherwise defined or restricted
by the Board of Directors.
4.12. Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such salary
by reason of the fact that he is also a director of the Corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS,
AND DEPOSITS: SPECIAL CORPORATE ACTS
5.01. Contracts. The Board of Directors may authorize any officer
or officers, agent or agents, to enter into any contract or execute or deliver
any instrument in the name of and on behalf of the Corporation, and such
authorization may be general or confined to specific instances. In the absence
of other designation, all deeds, mortgages and instruments of assignment or
pledge made by the Corporation shall be executed in the name of the Corporation
by the President or one of the Vice Presidents and by the Secretary, an
Assistant Secretary, the Treasurer or an Assistant Treasurer; the Secretary or
an Assistant Secretary, when necessary or required, shall affix the corporate
seal thereto; and when so executed no other party to such instrument or any
third party shall be required to make any inquiry into the authority of the
signing officer or officers.
5.02. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by or under the authority of a resolution of the Board of Directors.
Such
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authorization may be general or confined to specific instances.
5.03. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by or under the authority of a resolution of the Board of Directors.
5.04. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as may be selected by or under the
authority of a resolution of the Board of Directors.
5.05. Voting of Shares Owned by the Corporation. Subject always to
the specific directions of the Board of Directors, any share or shares of stock
or other securities issued by any other corporation and owned or controlled by
the Corporation may be voted at any meeting of security holders of such other
corporation by the President of the Corporation if he be present, or in his
absence, by any Vice President of the Corporation who may be present.
Whenever, in the judgment of the President, or in his absence, of any Vice
President, it is desirable for the Corporation to execute a proxy or written
consent in respect to any share or shares of stock or other securities issued
by any other corporation and owned by the Corporation, such proxy or consent
shall be executed in the name of the Corporation by the President or one of the
Vice Presidents of the Corporation and shall be attested by the Secretary or an
Assistant Secretary of the Corporation under the corporate seal without
necessity of any authorization by the Board of Directors. Any person or
persons designated in the manner above stated as the proxy or proxies of the
Corporation shall have full right, power and authority to vote the share or
shares of stock issued by such other corporation and owned by the Corporation
the same as such share or shares might be voted by the Corporation.
ARTICLE VI. CERTIFICATES FOR SHARES AND
THEIR TRANSFER
6.01. Certificates for Shares. Certificates representing shares of
the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or by the Secretary or
an Assistant Secretary. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the person to whom
the shares represented thereby are issued, with the number of shares and date
of issue, shall be registered upon the stock transfer books of the Corporation.
All certificates surrendered to the Corporation for transfer shall be canceled
and no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except as provided
in Section 6.05.
6.02. Facsimile Signatures and Seal. The seal of the Corporation on
any certificates for shares may be a facsimile. The signatures of the
President or Vice President and the Treasurer or Assistant Treasurer or the
Secretary or an Assistant Secretary upon a certificate may be facsimiles if the
certificate is countersigned (l) by a transfer agent other than the Corporation
or its employee, or (2) by a registrar other than the Corporation or its
employee.
6.03. Signature by Former Officers. If any officer, who has signed
or whose facsimile signature has been placed upon any certificate for shares,
has ceased to be such officer before such certificate is issued, it may be
issued
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by the Corporation with the same effect as if he were such officer as the date
of its issue.
6.04 Transfer of Shares. Prior to due presentment of a certificate
for shares for registration of transfer the Corporation may treat the
registered owner of such shares as the person exclusively entitled to vote, to
receive notifications and otherwise to exercise all the rights and powers of an
owner. Where a certificate for shares is presented to the Corporation with a
request to register for transfer, the Corporation shall not be liable to the
owner or any other person suffering loss as a result of such registration of
transfer if (a) there were on the certificate the necessary endorsements, and
(b) the Corporation had no duty to inquire into adverse claims or has
discharged any such duty. The Corporation may require reasonable assurance
that said endorsements are genuine and effective and compliance with such other
regulations as may be prescribed under the authority of the Board of Directors.
6.05. Restrictions on Transfer. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the Corporation upon the transfer of such shares.
6.06. Lost, Destroyed or Stolen Certificates. Where the registered
owner claims that his certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if the
owner (a) so requests before the Corporation has notice that such shares have
been acquired by a bona fide purchaser, and (b) files with the Corporation a
sufficient indemnity bond, and (c) satisfies such other reasonable requirements
as the Board of Directors may prescribe.
6.07. Consideration for Shares. The share of the Corporation may be
issued for such consideration as shall be fixed from time to time by the Board
of Directors, provided that any shares having a par value shall not be issued
for a consideration less than the par value thereof. The consideration to be
paid for shares may be paid in whole or in part in money, in other property,
tangible or intangible, or in labor or services actually performed for the
Corporation. When payment of the consideration for which shares are to be
issued shall have been received by the Corporation, such shares shall be deemed
to be fully paid and non-assessable by the Corporation. No certificate shall
be issued for any shares until such share is fully paid.
6.08. Stock Regulations. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the Corporation.
ARTICLE VII. SEAL
7.01. The Board of Directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
Corporation, the state of incorporation and the words "Corporate Seal."
ARTICLE VIII. INDEMNIFICATION
8.01. Mandatory Indemnification.
(a) In all cases other than those set forth in Section
8.01(b) hereof and subject to the conditions
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and limitations set forth hereinafter in this Article VIII, the Corporation
shall indemnify and hold harmless any person who is or was a party, or is
threatened to be made a party, to any Action (see Section 8.16 of this Article
VIII for definitions of capitalized terms used herein) by reason of his or her
status as an Executive, and/or as to acts performed in the course of such
Executive's duties to the Corporation and/or an Affiliate, against Liabilities
and reasonable Expenses incurred by or on behalf of an Executive in connection
with any Action, including, without limitation, in connection with the
investigation, defense, settlement or appeal of any action; provided, that it
is not determined by the Authority or by a court, pursuant to Section 8.03,
that the Executive engaged in misconduct which constitutes a Breach of Duty.
(b) To the extent an Executive has been successful on the
merits or otherwise in connection with any Action, including, without
limitation, the settlement, dismissal, abandonment or withdrawal of any such
Action where the Executive does not pay, incur or assume any material
Liabilities, or in connection with any claim, issue or matter therein, he or
she shall be indemnified by the Corporation against reasonable Expenses
incurred by or on behalf of him or her in connection therewith. The
Corporation shall pay such Expenses to the Executive (net of all Expenses, if
any, previously advanced to the Executive pursuant to Section 8.02), or to such
other person or entity as the Executive may designate in writing to the
Corporation, within ten (10) days after the receipt of the Executive's written
request therefor, without regard to the provisions of Section 8.03. In the
event the Corporation refuses to pay such requested Expenses, the Executive may
petition a court to order the Corporation to make such payment pursuant to
Section 8.04.
(c) Notwithstanding any other provision contained in this
Article VIII to the contrary, the Corporation shall not:
(i) indemnify, contribute or advance Expenses
to an Executive with respect to any Action initiated or brought
voluntarily by the Executive and not by way of defense, except with
respect to Actions:
(1) brought to establish or enforce
a right to indemnification, contribution and/or an advance of
Expenses under Section 8.04 of this Article VIII, under the
Statute as it may then be in effect or under any other
applicable statute or law or otherwise as required:
(2) initiated or brought
voluntarily by an Executive to the extent such Executive is
successful on the merits or otherwise in connection with such
an Action in accordance with and pursuant to Section 8.01(b)
of this Article VIII; or
(3) as to which the Board
determines it be appropriate.
(ii) indemnify an Executive against judgments,
fines or penalties incurred in a Derivative Action if the Executive is
finally adjudged liable to the Corporation by a court (unless the
court before which such Derivative Action was brought determines that
the Executive is fairly and reasonably entitled to indemnity for any
or all of such judgments, fines or penalties); or
(iii) indemnify an Executive under this Article
VIII for any amounts paid in settlement
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of any Action effected without the Corporation's written consent.
The Corporation shall not settle any Action in any manner which would impose
any Liabilities or other type of limitation on the Executive without the
Executive's written consent. Neither the Corporation nor the Executive shall
unreasonably withhold their consent to any proposed settlement.
(d) An Executive's conduct with respect to an employee
benefit plan sponsored by or otherwise associated with the Corporation and/or
an Affiliate for a purpose he or she reasonably believes to be in the interests
of the participants in and beneficiaries of such plan is conduct that does not
constitute a breach or failure to perform his or her duties to the Corporation
or an Affiliate, as the case may be.
8.02. Advance for Expenses.
(a) The Corporation shall pay to an Executive, or to such
other person or entity as the Executive may designate in writing to the
Corporation, his or her reasonable Expenses incurred by or on behalf of such
Executive in connection with any Action, or claim, issue or matter associated
with any such Action, in advance of the final disposition or conclusion of any
such Action (or claim, issue or matter associated with any such Action), within
ten (10) days after the receipt of the Executive's written request therefor;
provided, the following conditions are satisfied:
(i) the Executive has first requested an
advance of such Expenses in writing (and delivered a copy of
such request to the Corporation) from the insurance
carrier(s), if any, to whom a claim has been reported under an
applicable insurance policy purchased by the Corporation and
each such insurance carrier, if any, has declined to make such
an advance;
(ii) the Executive furnishes to the Corporation
an executed written certificate affirming his or her good
faith belief that he or she has not engaged in misconduct
which constitutes a Breach of Duty; and
(iii) the Executive furnishes to the Corporation
an executed written agreement to repay any advances made under
this Section 8.02 if it is ultimately determined that he or
she is not entitled to be indemnified by the Corporation for
such Expenses pursuant to this Article VIII.
(b) If the Corporation makes an advance of Expenses to an
Executive pursuant to this Section 8.02, the Corporation shall be subrogated to
every right of recovery the Executive may have against any insurance carrier
from whom the Corporation has purchased insurance for such purpose.
8.03. Determination of Right to Indemnification.
(a) Except as otherwise set forth in this Section 8.03 or
in Section 8.01(c), any indemnification to be provided to an Executive by the
Corporation under Section 8.01(a) of this Article VIII upon the final
disposition or conclusion of any Action, or any claim, issue or matter
associated with any such Action, unless otherwise ordered by a court, shall be
paid by the Corporation to an Executive (net of all Expenses, if any,
previously
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advanced to the Executive pursuant to Section 8.02), or to such other person or
entity as the Executive may designate in writing to the Corporation, within
sixty (60) days after the receipt of the Executive's written request therefor.
Such request shall include an accounting of all amounts for which
indemnification is being sought. No further corporate authorization for such
payment shall be required other than this Section 8.03(a).
(b) Notwithstanding the foregoing, the payment of such
requested indemnifiable amounts pursuant to Section 8.01(a) may be denied by
the Corporation if:
(i) the Board by a majority vote thereof
determines that the Executive has engaged in misconduct which
constitutes a Breach of Duty;
(ii) a majority of the directors of the
Corporation are a party-in-interest to such Action.
(c) In either event of nonpayment pursuant to Section
8.03(b), the Board shall immediately authorize and direct, by resolution, that
an independent determination be made as to whether the Executive has engaged in
misconduct which constitutes a Breach of Duty and, therefore, whether
indemnification of the Executive is proper pursuant to this Article VIII.
(d) Such independent determination shall be made, at the
option of the Executive(s) seeking indemnification, by (i) a panel of three
arbitrators (selected as set forth below in Section 8.03(f) from the panels of
arbitrators of the American Arbitration Association) in Milwaukee, Wisconsin,
in accordance with the Commercial Arbitration Rules then prevailing of the
American Arbitration Association; (ii) an independent legal counsel mutually
selected by the Executive(s) seeking indemnification and the Board by a
majority vote of a quorum thereof consisting of directors who were not
parties-in-interest to such Action (or, if such quorum is not obtainable, by
the majority vote of the entire Board); or (iii) a court in accordance with
Section 8.04 of this Article VIII.
(e) In any such determination there shall exist a
rebuttable presumption that the Executive has not engaged in misconduct which
constitutes a Breach of Duty and is, therefore, entitled to indemnification
hereunder. The burden of rebutting such presumption by clear and convincing
evidence shall be on the Corporation.
(f) If a panel of arbitrators is to be employed
hereunder, one of such arbitrators shall be selected by the Board by a majority
vote of a quorum thereof consisting of directors who were not
parties-in-interest to such Action (or, if such quorum is not obtainable, by an
independent legal counsel chosen by the majority vote of the entire Board, the
second by the Executive(s) seeking indemnification and the third by the
previous two arbitrators.
(g) The Authority shall make its independent
determination hereunder within sixty (60) days of being selected and shall
simultaneously submit a written opinion of its conclusions to both the
Corporation and the Executive.
(h) If the Authority determines that an Executive is
entitled to be indemnified for any amounts pursuant to this Article VIII, the
Corporation shall pay such amounts to the Executive (net of all Expenses, if
any, previously advanced to the Executive pursuant to Section 8.02), including
interest thereon as provided in Section 8.06(c), or to such other person or
entity as the Executive may designate in writing to the Corporation, within ten
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(10) days of receipt of such opinion.
(i) The Expenses associated with the indemnification
process set forth in this Section 8.03, including, without limitation, the
Expenses of the Authority selected hereunder, shall be paid by the Corporation.
8.04. Court-Ordered Indemnification and Advance for Expenses.
(a) An Executive may, either before or within two (2)
years after a determination, if any, has been made by the Authority, petition
the court before which such Action was brought or any other court of competent
jurisdiction to independently determine whether or not he or she has engaged in
misconduct which constitutes a Breach of Duty and is, therefore, entitled to
indemnification under the provisions of this Article VIII. Such court shall
thereupon have the exclusive authority to make such determination unless and
until such court dismisses or otherwise terminates such proceeding without
having made such determination. An Executive may petition a court under this
Section 8.04 either to seek an initial determination by the court as authorized
by Section 8.03(d) or to seek review by the court of a previous adverse
determination by the Authority.
(b) The court shall make its independent determination
irrespective of any prior determination made by the Authority; provided,
however, that there shall exist a rebuttable presumption that the Executive has
not engaged in misconduct which constitutes a Breach of Duty and is, therefore,
entitled to indemnification hereunder. The burden of rebutting such
presumption by clear and convincing evidence shall be on the Corporation.
(c) In the event the court determines that an Executive
has engaged in misconduct which constitutes a Breach of Duty, it may
nonetheless order indemnification to be paid by the Corporation if it
determines that the Executive is fairly and reasonably entitled to
indemnification in view of all of the circumstances of such Action.
(d) In the event the Corporation does not (i) advance
Expenses to the Executive within ten (10) days of such Executive's compliance
with Section 8.02; or (ii) indemnify an Executive with respect to requested
Expenses under Section 8.01(b) within ten (10) days of such Executive's written
request therefor, the Executive may petition the court before which such Action
was brought, if any, or any other court of competent jurisdiction to order the
Corporation to pay such reasonable Expenses immediately. Such court, after
giving any notice it considers necessary, shall order the Corporation to pay
such Expenses if it determines that the Executive has complied with the
applicable provisions of Section 8.02 or 8.01(b), as the case may be.
(e) If the court determines pursuant to this Section 8.04
that the Executive is entitled to be indemnified for any Liabilities and/or
Expenses, or to the advance of Expenses, unless otherwise ordered by such
court, the Corporation shall pay such Liabilities and/or Expenses to the
Executive (net of all Expenses, if any, previously advanced to the Executive
pursuant to Section 8.02), including interest thereon as provided in Section
8.06(c), or to such other person or entity as the Executive may designate in
writing to the Corporation, within ten (10) days of the rendering of such
determination.
(f) An Executive shall pay all Expenses incurred by such
Executive in connection with the judicial determination provided in this
Section 8.04, unless it shall ultimately be determined by the court that he or
she is
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entitled, in whole or in part, to be indemnified by, or to receive an advance
from, the Corporation as authorized by this Article VIII. All Expenses
incurred by an Executive in connection with any subsequent appeal of the
judicial determination provided for in this Section 8.04 shall be paid by the
Executive regardless of the disposition of such appeal.
8.05. Termination of an Action is Nonconclusive. The adverse
termination of any Action against an Executive by judgment, order, settlement,
conviction, or upon a plea of no contest or its equivalent, shall not, of
itself, create a presumption that the Executive has engaged in misconduct which
constitutes a Breach of Duty.
8.06. Partial Indemnification; Reasonableness; Interest.
(a) If it is determined by the Authority, or by a court,
that an Executive is entitled to indemnification as to some claims, issues or
matters, but not as to other claims, issues or matters, involved in any Action,
the Authority, or the court, shall authorize the proration and payment by the
Corporation of such Liabilities and/or reasonable Expenses with respect to
which indemnification is sought by the Executive, among such claims, issues or
matters as the Authority, or the court, shall deem appropriate in light of all
of the circumstances of such Action.
(b) If it is determined by the Authority, or by a court,
that certain Expenses incurred by or on behalf of an Executive are for whatever
reason unreasonable in amount, the Authority, or the court, shall nonetheless
authorize indemnification to be paid by the Corporation to the Executive for
such Expenses as the Authority, or the court, shall deem reasonable in light of
all of the circumstances of such Action.
(c) Interest shall be paid by the Corporation to an
Executive, to the extent deemed appropriate by the Authority, or by a court, at
a reasonable interest rate, for amounts for which the Corporation indemnifies
or advances to the Executive.
8.07. Insurance; Subrogation.
(a) The Corporation may purchase and maintain insurance
on behalf of any person who is or was an Executive of the Corporation, and/or
is or was serving as an Executive of an Affiliate, against Liabilities and/or
Expenses asserted against him or her and/or incurred by or on behalf of him or
her in any such capacity, or arising out of his or her status as such an
Executive, whether or not the Corporation would have the power to indemnify him
or her against such Liabilities and/or Expenses under this Article VIII or
under the Statute as it may then be in effect. Except as expressly provided
herein, the purchase and maintenance of such insurance shall not in any way
limit or affect the rights and obligations of the Corporation and/or any
Executive under this Article VIII. Such insurance may, but need not, be for
the benefit of all Executives of the Corporation and those serving as an
Executive of an Affiliate.
(b) If an Executive shall receive payment from any
insurance carrier or from the plaintiff in any Action against such Executive in
respect of indemnified amounts after payments on account of all or part of such
indemnified amounts have been made by the Corporation pursuant to this Article
VIII, such Executive shall promptly reimburse the Corporation for the amount,
if any, by which the sum of such payment by such insurance carrier or such
plaintiff and payments by the Corporation to such Executive exceeds such
indemnified amounts; provided,
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however, that such portions, if any, of such insurance proceeds that are
required to be reimbursed to the insurance carrier under the terms of its
insurance policy, such as deductible, retention or co-insurance amounts, shall
not be deemed to be payments to such Executive hereunder.
(c) Upon payment of indemnified amounts under this
Article VIII, the Corporation shall be subrogated to such Executive's rights
against any insurance carrier in respect of such indemnified amounts and the
Executive shall execute and deliver any and all instruments and/or documents
and perform any and all other acts or deeds which the Corporation shall deem
necessary or advisable to secure such rights. The Executive shall do nothing
to prejudice such rights of recovery or subrogation.
8.08. Witness Expenses. The Corporation shall advance or reimburse
any and all reasonable Expenses incurred by or on behalf of an Executive in
connection with his or her appearance as a witness in any Action at a time when
he or she has not been formally named a defendant or respondent to such Action,
within ten (10) days after the receipt of an Executive's written request
therefor.
8.09. Contribution.
(a) Subject to the limitations of this Section 8.09, if
the indemnity provided for in Section 8.01 of this Article VIII is unavailable
to an Executive for any reason whatsoever, the Corporation, in lieu of
indemnifying the Executive, shall contribute to the amount incurred by or on
behalf of the Executive, whether for Liabilities and/or for reasonable Expenses
in connection with any Action in such proportion as deemed fair and reasonable
by the Authority, or by a court, in light of all of the circumstances of any
such Action, in order to reflect:
(i) the relative benefits received by the
Corporation and the Executive as a result of the event(s) and/or
transaction(s) giving cause to such Action; and/or
(ii) the relative fault of the Corporation (and
its other Executives, employees and/or agents) and the Executive in
connection with such event(s) and/or transaction(s).
(b) The relative fault of the Corporation (and its other
Executives, employees and/or agents), on the one hand, and of the Executive, on
the other hand, shall be determined by reference to, among other things, the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent the circumstances resulting in such Liabilities and/or
Expenses. The Corporation agrees that it would not be just and equitable if
contribution pursuant to this Section 8.09 were determined by pro rata
allocation or any other method of allocation which does not take into account
the foregoing equitable considerations.
(c) An Executive shall not be entitled to contribution
from the Corporation under this Section 8.09 in the event it is determined by
the Authority, or by a court, that the Executive has engaged in misconduct
which constitutes a Breach of Duty.
(d) The Corporation's payment of, and an Executive's
right to, contribution under this Section 8.09 shall be made and determined in
accordance with and pursuant to the provisions in Sections 8.03 and/or 8.04
19
<PAGE> 20
of this Article VIII relating to the Corporation's payment of, and the
Executive's right to, indemnification under this Article VIII.
8.10. Indemnification of Employees. Unless otherwise specifically
set forth in this Article VIII, the Corporation shall indemnify and hold
harmless any person who is or was a party, or is threatened to be made a party
to any Action by reason of his or her status as, or the fact that he or she is
or was an employee or authorized agent or representative of the Corporation
and/or an Affiliate as to acts performed in the course and within the scope of
such employee's, agent's or representative's duties to the Corporation and/or
an Affiliate, in accordance with and to the fullest extent permitted by the
Statute as it may then be in effect.
8.11. Severability. If any provision of this Article VIII shall be
deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article VIII contravene public
policy, this Article VIII shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene public policy
shall be deemed, without further Action or deed by or on behalf of the
Corporation, to be modified, amended and/or limited, but only to the extent
necessary to render the same valid and enforceable, and the Corporation shall
indemnify and hold harmless an Executive as to Liabilities and reasonable
Expenses with respect to any Action to the full extent permitted by any
applicable provision of this Article VIII that shall not have been invalidated
and to the full extent otherwise permitted by the Statute as it may then be in
effect.
8.12. Non-exclusivity of Article VIII. The right to
indemnification, contribution and advancement of Expenses provided to an
Executive by this Article VIII shall not be deemed exclusive of any other
rights to indemnification, contribution and/or advancement of Expenses which
any Executive or other employee or agent of the Corporation and/or of an
Affiliate may be entitled under any charter provision, written agreement,
resolution, vote of stockholders or disinterested directors of the Corporation
or otherwise, including, without limitation, under the Statute as it may then
be in effect, both as to acts in his or her official capacity as such Executive
or other employee or agent of the Corporation and/or of an Affiliate or as to
acts in any other capacity while holding such office or position, whether or
not the Corporation would have the power to indemnify, contribute and/or
advance Expense to the Executive under this Article VIII or under the Statute.
8.13. Notice to the Corporation; Defense of Actions.
(a) An Executive shall promptly notify the Corporation in
writing upon being served with or having actual knowledge of any citation,
summons, complaint, indictment or any other similar document relating to any
Action which may result in a claim of indemnification, contribution or
advancement of Expenses hereunder, but the omission so to notify the
Corporation will not relieve the Corporation from any liability which it may
have to the Executive otherwise than under this Agreement unless the
Corporation shall have been irreparably prejudiced by such omission.
(b) With respect to any such Action as to which an
Executive notifies the Corporation of the commencement thereof:
(i) The Corporation shall be entitled to
participate therein at its own expense; and
20
<PAGE> 21
(ii) Except as otherwise provided below, to the
extent that it may wish, the Corporation (or any other indemnifying
party, including any insurance carrier, similarly notified by the
Corporation or the Executive) shall be entitled to assume the defense
thereof, with counsel selected by the Corporation (or such other
indemnifying party) and reasonably satisfactory to the Executive.
(c) After notice from the Corporation (or such other
indemnifying party) to the Executive of its election to assume the defense of
an Action, the corporation shall not be liable to the Executive under this
Article VIII for any Expenses subsequently incurred by the Executive in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. The Executive shall have the
right to employ his or her own counsel in such Action but the Expenses of such
counsel incurred after notice from the Corporation (or such other indemnifying
party) of its assumption of the defense thereof shall be at the expense of the
Executive unless (i) the employment of counsel by the Executive has been
authorized by the Corporation; (ii) the Executive shall have reasonably
concluded that there may be a conflict of interest between the Corporation (or
such other indemnifying party) and the Executive in the conduct of the defense
of such Action; or (iii) the Corporation (or such other indemnifying party)
shall not in fact have employed counsel to assume the defense of such Action,
in each of which cases the Expenses of counsel shall be at the expense of the
Corporation. The Corporation shall not be entitled to assume the defense of
any Derivative Action or any Action as to which the Executive shall have made
the conclusion provided for in clause (ii) above.
8.14. Continuity of Rights and Obligations. The terms and
provisions of this Article VIII shall continue as to an Executive subsequent to
his or her Termination Date and such terms and provisions shall inure to the
benefit of the heirs, estate, executors and administrators of such Executive
and the successors and assigns of the Corporation, including, without
limitation, any successor to the Corporation by way of merger, consolidation
and/or sale or disposition of all or substantially all of the assets or capital
stock of the Corporation. Except as provided herein, all rights and
obligations of the Corporation and the Executive hereunder shall continue in
full force and effect despite the subsequent amendment or modification of the
corporation's Restated Certificate of Incorporation, as such is in effect on
the date hereof, and such rights and obligations shall not be affected by any
such amendment or modification, any resolution of directors or stockholders of
the Corporation, or by any other corporate action which conflicts with or
purports to amend, modify, limit or eliminate any of the rights or obligations
of the Corporation and/or of the Executive hereunder.
8.15. Amendment. This Article VIII may only be altered, amended or
repealed by the affirmative vote of a majority of stockholders of the
Corporation so entitled to vote; provided, however, that the Board may alter or
amend this Article VIII without such stockholder approval if any such
alteration or amendment:
(a) is made in order to conform to any amendment or
revision of the Wisconsin Business Corporation Law, including, without
limitation, the Statute, which (i) expands or permits the expansion of an
Executive's right to indemnification thereunder; (ii) limits or eliminates, or
permits the limitation or elimination, of the liability of the Executives; or
(iii) is otherwise beneficial to the Executives; or
(b) in the sole judgment and discretion of the Board,
does not materially adversely affect the rights and protections of the
stockholders of the Corporation.
21
<PAGE> 22
Any repeal, modification or amendment of this Article VIII shall not
adversely affect any rights or protections of an Executive existing under this
Article VIII immediately prior to the time of such repeal, modification or
amendment.
8.16. Certain Definitions. The following terms as used in this
Article VIII shall be defined as follows:
(a) "Action(s)" shall include, without limitation, any
threatened, pending or completed action, claim, litigation, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, whether
predicated on foreign, Federal, state or local law, whether brought under
and/or predicated upon the Securities Act of 1933, as amended, and/or the
Securities Exchange Act of 1934, as amended, and/or their respective state
counterparts and/or any rule or regulation promulgated thereunder, whether a
Derivative Action and/or whether formal or informal.
(b) "Affiliate" shall include, without limitation, any
corporation, partnership, joint venture, employee benefit plan, trust, or other
similar enterprise that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
the Corporation.
(c) "Authority" shall mean the panel of arbitrators or
independent legal counsel selected under Section 8.03 of the Agreement.
(d) "Board" shall mean the Board of Directors of the
Corporation.
(e) "Breach of Duty" shall mean the Executive breached or
failed to perform his or her duties to the Corporation or an Affiliate, as the
case may be, and the Executive's breach of or failure to perform those duties
constituted:
(i) a breach of his or her "duty of loyalty"
(as defined herein) to the Corporation or its stockholders;
(ii) acts or omissions not in "good faith" (as
further defined herein) or which involve intentional misconduct or a
knowing violation of the law;
(iii) a violation of Section 180.0833 of the
Wisconsin Business Corporation Law; or
(iv) a transaction from which the Executive
derived an improper personal financial profit (unless such profit is
determined to be immaterial in light of all the circumstances).
In determining whether an Executive has acted or omitted to act
otherwise than in "good faith," as such term is used herein, the Authority, or
the court, shall determine solely whether such Executive (i) in the case of
conduct in his or her "official capacity" (as defined herein) with the
Corporation, believed in the exercise of his or her business judgment, that his
or her conduct was in the best interests of the Corporation; and (ii) in all
other cases, reasonably believed that his or her conduct was at least not
opposed to the best interested of the Corporation.
22
<PAGE> 23
(f) "Derivative Action" shall mean any Action brought by
or in the right of the Corporation and/or an Affiliate.
(g) "Duty of loyalty" shall mean a breach of fiduciary
duty by an Executive which constitutes a willful failure to deal fairly with
the Corporation or its stockholders in connection with a transaction in which
the Executive has a material undisclosed personal conflict of interest.
(h) "Executive(s)" shall mean any individual who is, was
or has agreed to become a director and/or officer of the Corporation and/or an
Affiliate.
(i) "Expenses" shall include, without limitation, any and
all expenses, fees, costs, charges, attorneys' fees and disbursements, other
out-of-pocket costs, reasonable compensation for time spent by the Executive in
connection with the Action for which he or she is not otherwise compensated by
the Corporation, any Affiliate, any third party or other entity and any and all
other direct and indirect costs of any type or nature whatsoever.
(j) "Liabilities" shall include, without limitation,
judgments, amounts incurred in settlement, fines, penalties and, with respect
to any employee benefit plan, any excise tax or penalty incurred in connection
therewith, and any and all other liabilities of every type or nature
whatsoever.
(k) "Official capacity" shall mean the office of director
or officer in the Corporation, membership on any committee of directors, any
other offices in the corporation held by an Executive and any other employment
or agency relationship between the Executive and the Corporation and "official
capacity," as such term is used herein, shall not include service for any
Affiliate or other foreign or domestic corporation or any partnership, joint
venture, trust, employee benefit plan, or other enterprise.
(l) "Statute" shall mean Section 180.0851 of the
Wisconsin Business Corporation Law (or any successor provisions).
(m) "Termination Date" shall mean the date an Executive
ceases, for whatever reason, to serve in an employment relationship with the
Company and/or any Affiliate.
ARTICLE IX. AMENDMENTS
9.01. By Stockholders. Except as otherwise provided in the Restated
Articles of Incorporation, these By-laws may be altered, amended or repealed
and new by-laws may be adopted by the stockholders by affirmative vote of not
less than a majority of the shares present or represented at any annual or
special meeting of the stockholders at which a quorum is in attendance.
9.02. By Directors. Except as otherwise provided in the Restated
Articles of Incorporation, these By-laws may also be altered, amended or
repealed and new by-laws may be adopted by the Board of Directors by the
affirmative vote of a majority of the number of directors present at any
meeting at which a quorum is in attendance; but no By-law adopted by the
stockholders shall be amended or repealed by the Board of Directors if the
By-law so
23
<PAGE> 24
adopted so provides.
24
<PAGE> 1
EXHIBIT 10.6
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AGREEMENT amends the Employment Agreement dated as of the 1st day
of January, 1994, by and between DAVID WHITE, INC. a Wisconsin corporation
("David White"), and TONY L. MIHALOVICH ("Mihalovich").
WHEREAS, David White and Mihalovich entered into an Employment
Agreement as of the 1st day of January, 1994, which continues in full force and
effect; and
WHEREAS, the parties agree that it is in their mutual best interests
to clarify certain ambiguities arising out of the terms and conditions of the
Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Deferred Compensation. Paragraph 3.e. is hereby amended to
read as follows:
"e. The DCA, including all accrued interest therein, shall be
paid upon termination of the employment of Mihalovich for any reason, including
death or disability. It is understood and agreed that David White's obligation
to pay such sums to Mihalovich is unconditional and the right of Mihalovich to
receive payment of such sums is fully vested, subject to compliance by
Mihalovich with the restricted covenants set forth in paragraph 5."
1
<PAGE> 2
2. Severance Pay Upon Termination. Paragraph 6.a. is hereby
amended to read as follows:
"a. If David White terminates the employment of Mihalovich
for any reason prior to the end of the current term of employment as provided
in paragraph 1 above, David White shall remain fully liable to Mihalovich for
payment of the Base Compensation specified in paragraph 2.a. then being
received plus all benefits provided under paragraph 4 for the remainder of his
employment under this Agreement without regard to or the cause of such
termination (other than termination by reason of death or disability and except
as may be provided in paragraph 4.d. with respect to outplacement services);
provided, however, that without regard to the amount of time remaining under
the current term of employment, the payment of Base Compensation and benefits
to Mihalovich shall in no event be for a period of less than twelve (12)
months."
3. Termination Following Change of Control. Paragraph 7.a. is
hereby amended to read as follows:
"a. The parties recognize that the termination of employment
of Mihalovich after a change in control would be beyond the reasonably
anticipated control of the present Board of Directors and may deprive
Mihalovich of the opportunity to continue his employment without regard to
merit. To that end, if the employment of Mihalovich is terminated following a
change of control of David White (as defined below), either
(1) by David White, or
(2) by Mihalovich following the occurrence of
one or more of the following events
without his specific written consent:
2
<PAGE> 3
(A) Assignment to any position,
duties, responsibilities, title
or status inconsistent with his
position, duties,
responsibilities, title or
status as of the date of the
change of control; or
(B) His Base Compensation is
reduced below the Base
Compensation as of the date of
the change of control or his
fringe benefits or perquisites
as of the date of a change of
control are materially reduced;
or
(C) Following a change of control
he is assigned or transferred
to an office location other
than in the Metropolitan
Milwaukee Area,
then, in that event, David White shall pay Mihalovich as severance
compensation, and in lieu of any separation payments otherwise provided upon
termination of employment hereunder, an amount equal to two times his Base
Compensation at the date of termination plus a prorated share of any Incentive
Bonus if due under paragraph 6.b. Such payment shall be made in a lump sum
within thirty (30) days following such termination and shall be made whether or
not Mihalovich obtains other employment. In addition and as a part of such
severance compensation, Mihalovich shall be entitled to a continuation of
medical, disability and life insurance on the same basis as other employees of
the Company for a period of twelve (12) months after the effective date of
termination."
4. All of the other terms and conditions of the Employment
Agreement dated as of the 1st day of January, 1994, except as specifically
amended hereby, shall remain in full force and effect.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this 5th day of December, 1995.
DAVID WHITE, INC.
By: Marshall A. Loewi
--------------------------
Tony L. Mihalovich
--------------------------------
Tony L. Mihalovich
4
<PAGE> 1
EXHIBIT 10.8
AMENDMENT TO STOCK OPTION AGREEMENT
THIS AGREEMENT amends the Stock Option Agreement dated as of the 1st
day of January, 1994, by and between DAVID WHITE, INC., a Wisconsin corporation
(the "Company"), and TONY L. MIHALOVICH (the "Optionee").
WHEREAS, the Optionee and the Company entered into an Employment
Agreement effective as of January 1, 1994 (the "Employment Agreement"); and
WHEREAS, pursuant to the Employment Agreement the Company granted
certain options to purchase shares of the Company's Common Stock to the
Optionee; and
WHEREAS, the Stock Option Agreement provides at paragraph 3 for the
vesting of options at a rate of 25% per year from and after January 1, 1995;
and
WHEREAS, the Stock Option Agreement does not currently provide for the
ability to exercise vested stock options on termination of the Optionee's
employment other than by reason of disability, death or retirement or change in
control; and
WHEREAS, the Company and the Optionee have agreed that vested options
should be able to be exercised in the event of a voluntary termination or a
termination not for "Cause";
NOW, THEREFORE, it is agreed as follows:
1. Paragraph 5 of the Stock Option Agreement is hereby amended to
read as follows:
"5. If the Optionee ceases to be an employee of the Company
or any subsidiary as a result of a termination for "Cause", then the option
shall terminate. If the Optionee ceases to be an employee of the Company or
any subsidiary by reason of voluntary termination by the Optionee, termination
by the Company not for "Cause", disability, death or retirement, then the
option shall terminate six (6) months after the Optionee ceases to be an
employee, but in no event beyond the "Option Period." A termination for
"Cause" for this purpose shall be defined as a willful failure to deal fairly
with the Company or its shareholders in a manner in which the Optionee has a
material conflict of interest; a violation of criminal law, unless the Optionee
shall have reasonable cause to believe that his conduct was lawful or no
reasonable cause to believe that his conduct was unlawful; a transaction for
which the Optionee derived an improper personal profit; or willful misconduct."
2. All of the other terms and conditions of the Stock Option
Agreement dated as of the 1st day of January, 1994, shall remain in full force
and effect except as specifically amended above.
IN WITNESS WHEREOF, the Company and the Optionee have caused this
Agreement to be executed and
1
<PAGE> 2
delivered this 5th day of December, 1995.
DAVID WHITE, INC.
By: Marshall A. Loewi
---------------------------
Attest:
By: James L. Younk
------------------------
OPTIONEE:
Tony L. Mihalovich
-------------------------------
Tony L. Mihalovich
[CORPORATE SEAL]
2
<PAGE> 1
EXHIBIT 13
[DAVID WHITE LOGO]
[PHOTO OF PRODUCT]
ANNUAL REPORT 1995
<PAGE> 2
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For Year Ended December 31
1995 1994
<S> <C> <C>
OPERATIONS SUMMARY
Net sales .................................. $15,278,000 $15,886,000
(Loss) earnings before income taxes ........ (999,000) 838,000
Net (loss) earnings ........................ (852,000) 701,000
Net (loss) earnings per common share ....... $ (1.75) $ 1.33
- --------------------------------------------------------------------------
QUARTERLY RESULTS
Net sales First .............. $ 4,827,000 $ 4,243,000
Second ............. 4,272,000 4,190,000
Third .............. 3,160,000 3,768,000
Fourth ............. 3,019,000 3,685,000
- --------------------------------------------------------------------------
Gross profit First .............. $ 1,282,000 $ 1,135,000
Second ............. 1,052,000 1,210,000
Third .............. 840,000 891,000
Fourth ............. 385,000 1,013,000
- --------------------------------------------------------------------------
Net earnings First .............. $ 214,000 $ 206,000
(loss) Second ............. (457,000) 306,000
Third .............. 136,000 96,000
Fourth ............. (745,000) 93,000
- --------------------------------------------------------------------------
Net earnings First .............. $ .41 $ .39
(loss) Second ............. (.91) .58
per share Third .............. .30 .18
Fourth ............. (1.55) .18
</TABLE>
ON THE COVER
The Finish-Line laser extended carpenter's level was introduced in 1995.
Functioning as both a precision carpenter's level and a visible beam laser with
a 100 foot interior range, the Finish-Line is priced to compete in the
growing do-it-yourself construction and remodeling markets, as well as for the
cost-conscious professionals.
CONTENTS
1-2 To Our Shareholders
3-5 Consolidated Financial Statements
6-8 Notes to Consolidated Financial Statements
9 Management's Discussion and Analysis
INSIDE BACK COVER: Directors, Officers, Executive Offices, Annual Meeting
and 10-KSB Report
<PAGE> 3
[DAVID WHITE LETTERHEAD]
TO OUR SHAREHOLDERS:
David White's 1995 financial results did not meet our expectations. In many
ways, however, our net loss of $852,000 or $1.75 per share could not have been
avoided. Three one-time charges, including two that were made to ensure the
long-term health of the company, combined to more than offset another year of
operating profitability.
On May 31, we sold our 90% interest in Ammann Lasertechnik, AG of Switzerland.
Ammann had been unprofitable. Its sale also relieved David White of annual
payments for royalties, research and development and significant annual charges
for goodwill. In addition, 70,500 shares of common stock were converted to
treasury stock, which should positively affect earnings per share in the
future. The Ammann sale resulted in a non-cash charge of $575,000, which
included net of tax benefit.
In the fourth quarter, according to the terms of a labor agreement signed
earlier in 1995, we converted our costly defined benefit pension plan into a
much less expensive 401(k) program. This change, which resulted in a one-time
charge of $523,000, should benefit both the Company and the employees. The
Company has eliminated heavy administrative and insurance costs. Employees will
benefit through higher growth potential associated with individual investment
opportunities.
Also in the fourth quarter, David White took steps toward compliance with the
environmental issue at its Berlin, Wisconsin manufacturing facility. The
charge of $297,000 included a $200,000 reserve which the company believes will
be sufficient to cover any material expenses involved with future remediation.
Our sales reached $15,278,000 in 1995, only slightly lower than the $15,886,000
reported in 1994. Domestic sales climbed 9%, nearly offsetting the sales lost
through the sale of Ammann.
Excluding the one-time charges, our operating profit amounted to $543,000 or
$1.12 per share, compared with 1994 net income of $701,000 or $1.33 per share
in 1994. We achieved this operating profit despite rising mortgage lending
rates during the second half of the year. In addition, we aggressively sought
to expand our sales through continued domination of our traditional markets and
by entering rapidly growing new areas of the construction industry.
With these significant changes behind us, we are confident that David White is
in the best position it has been in for many years. We are unquestionably among
the leaders in our industry, with a highly efficient manufacturing operation
and an aggressive marketing program.
In addition, the outlook for the domestic construction industry is very good.
Late in 1995, interest rates began to move downward. Forecasts call for the
downtrend to continue, probably through the remainder of 1996.
Activity at David White responded immediately when the decline pushed mortgage
lending rates lower. As a result, we believe the first quarter of 1996 could be
one of the most profitable first quarters in our history.
We are maintaining a positive outlook for 1996, buoyed by outstanding new
product introductions in 1995. David White's competition simply has not been
able to match the features and affordability of our growing series of manually
leveled lasers.
The ML-200 visible split-beam laser has rapidly become one of the hottest new
products for the construction market. Full-featured versatility at an
affordable price made the ML-200 an instant success. The ML-200e, our exterior
version of the ML-200, includes many of the ML-200's selling features, at an
even lower price than the original.
David White's ability to modernize basic construction tools was demonstrated
with the 1995 introduction of the Finish-Line laser-extended carpenter's level
pictured on the cover of this report. Functioning both as a precision
carpenter's level and a visible beam laser with a 100-foot interior range, the
Finish-Line is priced for the growing do-it-yourself construction and
remodeling market, as well as for cost-conscious professionals.
1
<PAGE> 4
It should be noted that our new lines of affordable laser products are also
being well-received overseas. During 1995, we attracted distributors to serve
the growing markets of New Zealand, Australia, Israel and China. Products "Made
in the USA" are very popular abroad and the current monetary picture makes
David White very price competitive.
Our "Made in the USA" labels also give us a preferred position throughout our
own country. We're encouraged by the 1995 Brand Use Study conducted by Cahner's
Publishing's Professional Builder Magazine which demonstrated that David White
clearly maintained its market dominance in 1995.
The survey found that 60.8% of the contractors in the Midwestern United States
use David White optical and laser construction instruments; 57.9% in the South;
51% in the West and 42.9% in the East. Overall, the use of David White products
by 53.3% of the nation's builders was up from 52.8% in 1994 and 52.2% in 1993.
Continuing our strategy of producing modern laser products which are affordable
to every type of builder, we feel we can continue to increase our already
impressive lead over competitors. We are forging key relationships which will
open the growing do-it-yourself and remodeling markets. These new markets can
expand our sales dramatically in the years ahead and give the David White name
even greater visibility.
In 1995, David White's strengthened condition was recognized when the Board of
Directors received an unsolicited offer to purchase all the outstanding stock of
the Company. The sale remains under consideration by the board, with several
issues still outstanding.
In the meantime, your management remains dedicated to the continued growth of
the Company. We continue to emphasize ways to keep David White as profitable
as possible, through all cycles of the construction industry.
All of us at David White thank you for your steadfast support. We believe the
changes made in 1995 will enable us to produce much more consistent results for
shareholders in the years ahead.
Sincerely,
Tony L. Mihalovich
Tony L. Mihalovich
President, Chief Executive Officer
USE BY BUILDERS KEEPS GROWING
(Total % of use by builders)
[LINE CHART]
<TABLE>
<CAPTION>
1993 1994 1995
<S> <C> <C>
52.2% 52.8% 53.3%
</TABLE>
Source: Professional Builder 1995 Brand Use Study
DAVID WHITE OFTEN GETS EXCLUSIVE MENTION
[PIE CHART]
<TABLE>
<S> <C>
David White 50.3%
Other 28.5%
Brand A 12.9%
Brand B 8.3%
</TABLE>
Source: Professional Builder 1995 Brand Use Study
2
<PAGE> 5
CONSOLIDATED
FINANCIAL STATEMENTS [DAVID WHITE LOGO]
- -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET December 31,1995
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents (Note 1) .................................................... $ 0
Trade accounts receivable, less allowance of $95,000 (Note 3).......................... 1,479,000
Inventories (Notes 1 and 3) ........................................................... 4,611,000
Prepaid expenses and other current assets ............................................. 129,000
------------
Total Current Assets ................................................................ 6,219,000
Other Assets:
Technology and patents, less accumulated
amortization of $29,000 ........................................................... 183,000
Intangible pension asset (Note 5) ..................................................... 127,000
Deferred income taxes (Note 6) ........................................................ 147,000
Other ................................................................................. 36,000
------------
Total Other Assets .................................................................. 493,000
Property, plant and equipment at cost (Notes 1 and 3):
Land .................................................................................. 101,000
Buildings and improvements ............................................................ 2,103,000
Machinery and equipment ............................................................... 6,227,000
----------
8,431,000
---------
Less accumulated depreciation ......................................................... 5,966,000
------------
2,465,000
------------
$ 9,177,000
============
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Notes payable to banks (Note 3) ..................................................... $ 714,000
Trade accounts payable ................................................................ 763,000
Accrued wages and amounts withheld from employees ..................................... 169,000
Accrued retirement plan costs ......................................................... 90,000
Accrued environmental costs ........................................................... 200,000
Other accrued liabilities ............................................................. 263,000
Current maturities of long-term debt (Note 3) ......................................... 309,000
------------
Total Current Liabilities ........................................................... 2,508,000
Long- term debt, less current maturities (Note 3) .......................................... 1,840,000
Long-term pension liability (Note 5) ....................................................... 197,000
Stockholders' Investment (Notes 3 and 4):
Preferred stock, par value $1 a share: Authorized
1,000,000 shares; none issued
Common stock, par value $3 a share: Authorized
5,000,000 shares; issued 692,240 shares ........................................... 2,077,000
Additional paid-in capital ............................................................ 1,024,000
Retained earnings ..................................................................... 3,895,000
Additional pension liability (Note 5) ................................................. (70,000)
Treasury stock at cost--234,917 shares ............................................... (2,294,000)
------------
4,632,000
------------
$ 9,177,000
============
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
3
<PAGE> 6
CONSOLIDATED
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31
1995 1994
<S> <C> <C>
Revenues:
Net sales ............................................................ $ 15,278,000 $ 15,886,000
Interest and other income .............................................. 38,000 12,000
------------ ------------
15,316,000 15,898,000
Cost and expenses:
Cost of goods sold ..................................................... 11,422,000 11,637,000
Loss on termination of pension plan .................................... 523,000
Loss of sale of subsidiary ............................................. 722,000
Environmental expenses ................................................. 297,000
Selling and administrative expenses .................................... 2,986,000 2,959,000
Amortization of intangible assets ...................................... 75,000 183,000
Interest expense ....................................................... 290,000 264,000
Minority interest in earnings of subsidiary ............................ 0 17,000
------------ ------------
16,315,000 15,060,000
(Loss) earnings before income taxes ......................................... (999,000) 838,000
Income tax (benefit) expense (Note 6) ....................................... (147,000) 137,000
------------ ------------
Net (loss) earnings ......................................................... $ (852,000) $ 701,000
============ ============
Net (loss) earnings per share (Note7) ....................................... $ (1.75) $ 1.33
============ ============
</TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
Years ended December 31, 1995 and 1994
Common Stock Additional Retained Additional Cumulative Treasury
Paid-in Earnings Pension Translation Stock
Shares Amount Captial Liability Adjustment
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at
January 1, 1994 ........... 691,940 $2,076,000 $1,022,000 $4,046,000 $ (72,000) $ 35,000 $(1,537,000)
Net earnings ........................................................... 701,000
Currency translation
adjustments .......................................................................................... 48,000
Additional
pension liability (Note 5) ........................................................... (290,000)
Issuance of common stock ...... 300 1,000 2,000
- -----------------------------------------------------------------------------------------------------------------------------------
Balances at
December 31, 1994 ......... 692,240 $2,077,000 $1,024,000 $4,747,000 $(362,000) $ 83,000 $(1,537,000)
Net loss ............................................................... (852,000)
Currency translation
adjustments ........................................................................................... (83,000)
Reduction of
pension liability (Note 5) ........................................................... 292,000
Receipt of common stock
from sale of subsidiary ........................................................................................ (757,000)
-------- ---------- ---------- ---------- -------- -------- -----------
Balances at
December 31, 1995 ........ 692,240 $2,077,000 $1,024,000 $3,895,000 $(70,000) $ 0 $(2,294,000)
======== ========== ========== ========== ======== ======== ===========
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
4
<PAGE> 7
CONSOLIDATED
FINANCIAL STATEMENTS [DAVID WHITE LOGO]
- -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS
OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net (loss) earnings ................................................ $ (852,000) $ 701,000
Adjustments to reconcile net (loss) earnings to net cash (used in)
provided by operating activities:
Depreciation ..................................................... 388,000 377,000
Amortization of intangible assets ................................ 75,000 183,000
Gain on sales of equipment ....................................... (2,000)
Minority interest in earnings of subsidiary ...................... 17,000
Issuance of common stock-employment agreement .................... 3,000
Loss on sale of subsidiary ....................................... 722,000
Deferred income taxes ............................................ (147,000)
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable ........................................... 305,000 (337,000)
Inventories ................................................... (701,000) (563,000)
Prepaid expenses and other assets ............................. 137,000 (10,000)
Increase (decrease) in:
Accounts payable and accrued expenses ......................... (16,000) 166,000
Income taxes .................................................. (89,000) 127,000
----------- -----------
Net cash (used in) provided by operating activities ............. (178,000) 662,000
----------- -----------
Cash flows from investing activities:
Additions to property, plant and equipment ......................... (733,000) (493,000)
Cash proceeds from sale of equipment ............................... 2,000
----------- -----------
Net cash used in investing activities ............................ (733,000) (491,000)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of long-term debt ........................... 2,500,000
Principal payments on long-term debt ............................... (283,000) (68,000)
Net increase (decrease) in notes payable to bank ................... 297,000 (1,755,000)
----------- -----------
Net cash provided by financing activities ........................ 14,000 677,000
----------- -----------
Effect of exchange rate changes on cash .............................. 5,000 3,000
Net decrease in cash and cash equivalents ............................ (892,000) 851,000
----------- -----------
Cash and cash equivalents at beginning of year ....................... 892,000 41,000
----------- -----------
Cash and cash equivalents at end of year ............................. $ 0 $ 892,000
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ......................................................... $ 290,000 $ 259,000
Income taxes, net of refunds ..................................... 155,000 11,000
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
5
<PAGE> 8
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1: COMPANY BUSINESS AND ACCOUNTING POLICIES
David White, Inc. (the "Company") is engaged in the manufacture of surveying
instruments and lasers and is a distributor of certain other products. The
Company operates predominantly in the construction industry within the United
States and Europe. The Company's accounting policies include the following:
Consolidations - The consolidated financial statements include the accounts
of the parent company and its subsidiary. All significant intercompany accounts
and transactions have been eliminated.
Cash Equivalents - The Company considers all highly liquid investments
with maturities of three months or less when acquired to be cash equivalents.
Inventories - Inventories are stated on the basis of the lower of cost or
market, including material, labor and manufacturing overhead. Cost is
determined under the first-in, first-out method. It is not practical to
segregate the components of raw material, work-in-process and finished goods at
the balance sheet date, since this breakdown is possible only as a result of
physical inventory which is taken at a date different than the balance sheet.
Property, Plant and Equipment - The Company provides depreciation over the
estimated useful lives (3 to 32 years) of the respective assets using the
straight-line method.
Intangible Assets - Technology and patents are being amortized on a
straight-line method over their estimated lives, which range from 5 to 8 years.
Deferred financing costs are being amortized on a straight-line method over the
term of the related debt agreement.
Research and Development Costs - Research and development costs are
expensed as incurred and totalled $399,000 and $588,000 in 1995 and 1994,
respectively.
Fair Value of Financial Instruments - The Company believes the
carrying amount of its financial instruments (notes payable and long-term debt)
is a reasonable estimate of the fair value of these instruments.
Use of Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
2: SALE OF FOREIGN SUBSIDIARY
The Company sold its 90% interest in the outstanding capital stock of Ammann
Lasertechnik AG on May 31, 1995. The non-cash transaction is summarized as
follows:
<TABLE>
<S> <C>
Net carrying value of assets sold $ (691,000)
Write-off of goodwill (1,123,000)
Fair market value of Company common
stock received 757,000
Other assets received, net 353,000
------------
Loss on sale of subsidiary (722,000)
Tax benefit 147,000
------------
Loss on sale of subsidiary, net of taxes $ (575,000)
============
</TABLE>
Net sales for the subsidiary to unrelated parties for 1995 and 1994 totalled
approximately $1,601,000 and $3,387,000, respectively. Net losses incurred by
the subsidiary for 1995 and 1994 were approximately $77,000 and $40,000,
respectively. Net sales by the subsidiary to foreign affiliates aggregated
$962,000 in 1994.
3: BANK LINES OF CREDIT AND LONG-TERM DEBT
The Company has a $2,500,000 term note with a domestic bank which is payable in
monthly installments of $40,000, including interest at 8.5%, through August,
2001. The term note is collateralized by a first mortgage on the Company's
office and manufacturing facilities and a second lien on the Company's accounts
receivable, inventory and equipment. The loan agreement contains restrictions
with respect to levels of working capital ($1,000,000 on December 31, 1995) and
net worth ($4,600,000 on December 31, 1995) and minimum debt-to-net worth and
current ratios. In addition, capital expenditures are limited to a specified
level each year. The term note is 70% guaranteed by Farmers Home
Administration.
The aggregate scheduled future maturities for the fiscal years ending December
31 are as follows:
<TABLE>
<S> <C>
1996 $ 309,000
1997 336,000
1998 366,000
1999 399,000
2000 434,000
Thereafter 305,000
----------
$2,149,000
==========
</TABLE>
The Company currently has available a domestic bank revolving line of credit to
meet its short term borrowing needs. The amount available under the line of
credit is adjusted periodically according to seasonal requirements and ranges
from $1,750,000 to $3,000,000. Borrowings against the line are payable on
demand with interest payable monthly at the bank's prime rate. The bank's prime
rate was 8.5% on December 31, 1995. The Company had borrowings of $714,000
against the line as of December 31, 1995. The line renews annually in
September. Borrowings under the line of credit are based on a percentage of
qualified accounts receivable and inventory (the borrowing base), which are
secured under the related agreement along with a second lien on the Company's
office and manufacturing facilities. The agreement contains the same
restrictions described above related to the term note.
4: STOCK RIGHTS PLAN AND EMPLOYEE STOCK OPTION PLAN
In 1988, the Company made a dividend distribution of one Common Stock Purchase
Right on each outstanding share of common stock. The Rights are exercisable
only if a person or group acquires 20% or more of the Company's common stock or
announces a tender or exchange offer that would result in such a person or
group owning 20% or more of the common stock. When exercisable, each Right
entitles the holder thereof to purchase one share of common stock at an
exercise price of $35.00. Further, upon the occurrence of certain defined
events, the Rights are modified to entitle the holder to purchase common stock
of the Company or common stock of an "acquiring person" having a market value
equivalent to two times the exercise price of the Right. At no time do the
Rights have any voting power. The Rights expire on September 29, 1998. The
Company is entitled to redeem the Rights at $0.01 per Right until ten days
(subject to extension) after a public announcement that a 20% or more position
has been acquired, at which time they become nonredeemable. At December 31,
1995, 457,323 shares of common stock were reserved for issuance upon exercise
of the Rights.
6
<PAGE> 9
[DAVID WHITE LOGO]
- -------------------------------------------------------------------------------
In 1992, the stockholders approved the issuance of up to 32,000 shares of
common stock under a new incentive stock option plan. Options granted are
exercisable in varying increments and at various times as determined by the
Compensation Committee of the Board of Directors. The option period cannot
exceed ten years from the date of the grant and the options can be granted
until January, 2002, under this plan. In 1995, the stockholders approved the
issuance of up to 50,000 shares of common stock under a new incentive stock
option plan with terms similar to the 1992 plan described above. The options
can be granted until February, 2005. The following table summarizes stock
option activity for the years ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
Shares
Reserved Outstanding Available
Options
<S> <C> <C> <C>
Balances, January 1, 1994
$6.50 - $10.44 per share ........ 33,900 28,700 5,200
Granted - $6.88 per share ....... 250 (250)
Granted - $6.50 per share ....... 4,950 (4,950)
Expired - $10.38 per share ...... (700) (700)
------ ------ ------
Balances, December 31, 1994
$6.50 - $10.44 per share ........ 33,200 33,200 0
Approval of granting authority .. 50,000 50,000
Expired -$6.50 per share......... (4,700) 4,700
Expired -$6.88 per share ........ (2,050) 2,050
Expired -$10.44 per share ....... (1,200) (1,200)
------ ------ ------
Balances, December 31, 1995...... 82,000 25,250 56,750
====== ====== ======
Options exercisable
at December 31,1995
$6.50 - $6.88 per share ........ 16,438
======
</TABLE>
In the event of a change in control of the Company, all options become
exercisable and those holding options shall have the right to require the
Company to purchase their options. The purchase price of the options will be
the excess of the greater of the market value of the Company stock or highest
tender offer price paid over the option price.
In 1990, the Company issued a nonqualified stock option to its former Chairman
of the Board of Directors, providing for the purchase of 16,000 shares of
common stock at $10 per share. In January, 1994, the option became fully
vested and is exercisable in whole or in part until January, 1998. The option
expires upon the death of the optionee.
5: EMPLOYEE BENEFIT PLANS
The Company has a contributory defined contribution pension plan covering
substantially all nonunion employees. The nonunion plan contains provision
for benefits relating to past service based on an employee's compensation and
years of service at the time the plan became effective. Company defined
contributions to the nonunion plan are based upon a percentage of annual wages
and employee contributions. The Company's funding policy for the plan is
consistent with the funding requirements of federal law and regulations.
The following table sets forth the nonunion past service plan's funded status
as estimated by consulting actuaries as of October 1, 1995 and the amounts
recognized in the Company's financial statements:
Company's financial statements:
<TABLE>
<S> <C>
Actuarial present value of
benefit obligations:
Accumulated benefit
obligation, including vested
benefits of $640,000 $ 640,000
---------
Projected benefit obligation for
service rendered to date $ 640,000
Plan assets at fair value
(government obligations,
mutual stock funds and
money market funds) 379,000
---------
Projected benefit obligations
in excess of
plan assets (261,000)
Unrecognized net loss 70,000
Unrecognized net obligation at
January 1,1987 being
amortized over 15 years 127,000
Additional minimum liability (197,000)
---------
Pension liability recognized in
the consolidated balance
sheet $(261,000)
=========
</TABLE>
[CAPTION]
Net periodic pension cost for the Company's non-union
plan included the following components:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Interest cost on projected
benefit obligation ............$ 43,000 $ 42,000
Actual return on plan
assets ........................ (49,000) (4,000)
Net amortization and
deferral ...................... 45,000 (3,000)
-------- --------
Periodic costs attributable to
defined benefits .............. 39,000 35,000
Pension costs attributable
to defined contributions ...... 27,000 24,000
-------- --------
Total pension expense ........... $ 66,000 $ 59,000
======== ========
</TABLE>
The weighted average discount rate and expected long term rate of return used
to develop the periodic pension costs for the above plan was as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Discount rate ...................... 6.25% 7.25%
Expected long-term
return on assets ................. 7.75% 7.75%
</TABLE>
The Company has reflected those provisions of Statement of Financial Accounting
Standards No. 87, "Employers' Accounting for Pensions," which require
recognition in the balance sheet of an additional minimum liability and
intangible asset for pension plans with accumulated benefits in excess of plan
assets. Because the asset recognized may not exceed the amount of unrecognized
prior service cost, the excess is reported as a separate reduction of
stockholders' investment.
7
<PAGE> 10
In addition, the Company has a contributory 401(k) savings plan covering
substantially all salaried employees, under which eligible participants may
elect to contribute a specified percentage of their compensation, subject to
certain limitations. The Company makes matching contributions subject to
certain limitation. Company contributions vest over a five-year period at a
rate of 20% per year. Contributions charged to operations under the plan
aggregated approximately $18,000 and $15,000 for the years ended December 1995
and 1994, respectively.
In the fourth quarter of 1995, the accumulated benefit obligation of the
Company's defined pension plan covering all union members was settled by the
purchase of a non-participating group annuity contract or a lump-sum
distribution for retired participants and lump sum distributions to active
participants. Active participants were given the option to transfer their
distributions into a 401(k) plan begun on January 1, 1996. The settlement was
accounted for in accordance with Statement of Financial Accounting Standards
No. 88, "Employers' Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits," and resulted in a pre-tax
loss to the Company of approximately $523,000. Pension expense related to this
plan for the years ended December 31, 1995 and 1994 was $70,000 and $119,000,
respectively.
The Company has Key Executive Employee and Severance Agreements with certain
officers and key employees which provide for severance pay of up to two year's
salary in the event of a change in control of the Company, as defined, and
subsequent termination of employment.
6: INCOME TAXES
Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>
Year ended December 31,
1995 1994
<S> <C> <C>
Currently payable-federal ........... $135,000
Currently payable-foreign ........... $ 2,000
Deferred credit ..................... $(147,000)
--------- --------
$(147,000) $137,000
========= ========
</TABLE>
At December 31, 1995, the Company had deferred tax assets of $1,064,000, which
include tax operating loss and credit carryforwards of $292,000 and deductible
temporary differences, principally inventory reserves of $233,000 and capital
losses of $247,000. Deferred tax liabilities were $269,000, with the principal
taxable temporary difference being accelerated depreciation of $207,000. The
total valuation allowance was $683,000, which represented the reduction of
deferred tax assets to $147,000 after giving effect to deferred tax
liabilities. The decrease in the valuation allowance was $166,000 and $94,000
for the years ended December 31, 1995 and 1994, respectively.
A reconciliation of the statutory Federal tax rate and the effective rate
follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Statutory tax rate ........................... (34.0)% 34.0%
Net operating loss and tax credit
carryforward adjustment ....................... 26.6 (29.0)
Nondeductible
amortization .................................. (2.6) 7.4
Other .......................................... (4.7) 3.9
----- -----
(14.7)% 16.3%
===== =====
</TABLE>
At December 31, 1995, the Company had alternative minimum tax credit and
general business tax credit carryforwards of $135,000 and $117,000,
respectively, which expire in various years through 2008. In addition, the
Company had state operating loss carryforwards of $502,000 which expire through
2007.
7: (LOSS) EARNINGS PER SHARE
Net (loss) earnings per share of common stock is based upon net (loss) earnings
divided by the weighted average shares outstanding. Weighted average shares
outstanding for the years ended December 31, 1995 and 1994 were 486,698 and
527,674 shares, respectively.
8: Contingency
The Company began a project to decontaminate the soil at its Berlin, Wisconsin
facility during 1995. The Company estimates the cost of this project to total
approximately $297,000 and has recorded this amount as an expense in 1995,
including $200,000 accrued in the fourth quarter for future remediation. The
ultimate cost, however, will depend on the extent of contamination found as the
project progresses.
8
<PAGE> 11
DAVID WHITE
- --------------------------------------------------------------------------------
MARKET INFORMATION
David White's common stock is traded in the over-the-counter market
and is quoted on NASDAQ under the symbol DAWH. The high and low bid prices
occurring during each quarter for 1995 and 1994 are set forth in the table
below. The prices represent inter-dealer quotations and do not include
adjustments for retail markups, markdowns or commissions and do not necessarily
represent actual transactions. As of December 31, 1995, there were
approximately 305 stockholders of record of David White, Inc. common stock.
BID PRICES OF COMMON SHARES
<TABLE>
<CAPTION>
1995 1994
HIGH LOW High Low
<S> <C> <C> <C> <C>
First Quarter $11 3/4 $8 3/4 $ 7 1/8 $6 1/4
Second Quarter 11 3/4 9 1/2 8 1/2 6 3/4
Third Quarter 11 9 3/4 12 1/2 8 1/2
Fourth Quarter 12 9 3/4 11 1/2 8 3/4
</TABLE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Directors of David White, Inc.
We have audited the accompanying consolidated balance sheet of David
White, Inc. and subsidiary as of December 31, 1995, and the related
consolidated statements of operations, stockholders' investment, and cash flows
for the years ended December 31, 1995 and 1994. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express our opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of David White, Inc. and
subsidiary at December 31, 1995, and the results of their operations and their
cash flows for the years ended December 31, 1995 and 1994 in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Milwaukee, Wisconsin
February 26, 1996
1995 COMPARED TO 1994
Sales in 1995 of $15.3 million were 4% less than 1994 sales of $15.9
million. Included in 1994, were sales from the Company's Swiss subsidiary,
Ammann Lasertechnik, AG, which was sold in May, 1995. Domestic sales for David
White were $13.7 million in 1995, up 9% over last year's sales of $12.5
million. In 1994, the former subsidiary posted sales of $3.4 million, while
sales in 1995 were only $1.6 million. For 1995, the Company reported a loss of
$852,000 versus a profit of $741,000 in 1994.
The sale of the Company's foreign subsidiary was one of three
significant 1995 events which adversely affected earnings. In May, the Company
sold its 90% investment in Ammann Lasertechnik, AG to Hans Ammann. The Swiss
subsidiary was originally purchased on June 30, 1989. Continuous losses along
with the deteriorating U.S. dollar made the products from Switzerland too
expensive to compete effectively in the U.S. market. As the consideration
received from the sale exceeded the net worth of Ammann Lasertechnik, AG, the
loss on the sale, net of tax benefit, was $575,000, including writing off the
remaining goodwill of $1.1 million.
The second event involved the termination of a defined benefit plan for
the Berlin manufacturing workforce. Charges related to the termination
totalled approximately $523,000.
The third event involved environmental charges incurred at the Berlin
facility. These charges totalled $297,000, of which $200,000 was reserved at
year end to cover the estimated cost of future clean up efforts.
Strong competitive pricing reduced gross margins from 27% in 1994 to
25% in 1995. Interest expense for 1995 was up $26,000 due to higher debt
levels required to support the increase in receivables and inventories.
The working capital at the end of 1995 was $3.7 million as compared to
$4.7 million at the end of 1994. The Company's current ratio at the end of
1995 was 2.5:1 versus 3.0:1 at the end of 1994.
The Company did not have any significant outstanding capital
commitments at year-end.
9
<PAGE> 12
DIRECTORS
MICHAEL S. ARIENS 1, 2
President, Ariens Company
Manufacturer of outdoor power equipment
R. RON HEILIGENSTEIN 2
Business Consultant
CHARLES D. JACOBUS 1, 2
President, Jacobus Company
Diversified company with interests in petroleum
and home security systems
MARSHALL A. LOEWI 1, 2
Chairman, David White, Inc.
President and Chief Executive,
Milwaukee Resistor Corporation
Manufacturer of power resistors and specialized
resistance products
TONY L. MIHALOVICH
President, Chief Executive Officer, David White, Inc.
1 Executive Committee, 2 Audit Committee
OFFICERS
TONY L. MIHALOVICH
President
Chief Executive Officer
JAMES L. YOUNK
Vice President - Finance
LARRY P. HUTZLER
Vice President - Manufacturing
STEPHEN M. SMITH
Vice President - Sales and Marketing
EXECUTIVE OFFICES
11711 River Lane
P.O. Box 1007
Germantown, WI 53022-8207
(414) 251-8100
Manufacturing Plant
Berlin, Wisconsin
Transfer Agent
Firstar Trust Company
Milwaukee, Wisconsin
10-KSB REPORT
A copy of the 1995 10-KSB Report, without exhibits, as submitted to the
Securities and Exchange Commission, may be obtained without charge by
writing to the Vice President-Finance, David White, Inc., P.O. Box 1007,
Germantown, WI 53022-8207.
ANNUAL MEETING
The annual stockholders' meeting of David White, Inc., will be held at the time
and place indicated in the proxy statements to be sent to shareholders.
[DAVID WHITE LOGO]
DAVID WHITE, INC. 11711 RIVER LANE, P.O. BOX 1007, GERMANTOWN, WI 53022-8207,
(414) 251-8100
<PAGE> 1
EXHIBIT 21
DAVID WHITE, INC.
Subsidiary (Until June 6, 1995)
Name Percentage State or Country
Ownership of Organization
Ammann Lasertechnik AG 90% Switzerland
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,574
<ALLOWANCES> (95)
<INVENTORY> 4,611
<CURRENT-ASSETS> 6,219
<PP&E> 8,431
<DEPRECIATION> (5,966)
<TOTAL-ASSETS> 9,177
<CURRENT-LIABILITIES> 2,508
<BONDS> 1,840
<COMMON> 2,077
0
0
<OTHER-SE> 2,555
<TOTAL-LIABILITY-AND-EQUITY> 9,177
<SALES> 15,278
<TOTAL-REVENUES> 15,316
<CGS> 11,422
<TOTAL-COSTS> 2,986
<OTHER-EXPENSES> 1,617
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 290
<INCOME-PRETAX> (999)
<INCOME-TAX> (147)
<INCOME-CONTINUING> (852)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (852)
<EPS-PRIMARY> (1.75)
<EPS-DILUTED> (1.75)
</TABLE>
